Seeking Bitcoin Returns? Coinbase's New Fund Offers a Conservative Approach

Institutional investors outside the U.S. will soon have a new way to earn Bitcoin returns without venturing into risky strategies, thanks to a new offering from Coinbase Asset Management.

Coinbase Asset Management is launching a new Bitcoin yield fund designed for institutional investors outside the U.S., offering a unique avenue for generating consistent returns on BTC without engaging in risky investment practices.

Set to commence operations on May 1, the Coinbase Bitcoin Yield Fund (CBYF) will focus on delivering stable BTC-denominated yields through low-risk market strategies. In contrast to speculative lending or staking techniques, the fund aims to provide a conservative approach to income generation.

Rather than promising high-interest rates like some crypto lending platforms of the past, which often led to difficulties, CBYF will utilize cash-and-carry arbitrage to generate yields. This method leverages price discrepancies that typically arise between Bitcoin’s spot and futures markets.

The fund will not have any exposure to third-party loans or derivatives strategies, and it will use third-party custodians to further protect client assets. Moreover, the fund is expected to generate annual net returns of 4% to 8%, which will be paid directly in Bitcoin.

“We are pleased to partner with Coinbase to bring this innovative product to market,” said Elliot Andrews, CEO of Aspen Digital.

“Institutions have been searching for a way to earn consistent returns from Bitcoin in a manner that is both compliant and minimizes risk in an investment climate that has grown increasingly sensitive.”

While Bitcoin offers inherent value and appreciation potential, it lacks native yield mechanisms like those found in Proof-of-Stake assets such as Ethereum or Solana. This poses a challenge for investors seeking to generate income from their Bitcoin holdings without engaging in excessive operational or investment risk.

CBYF was designed to fill this gap, presenting a unique opportunity for investors outside the U.S. to diversify their portfolios with Bitcoin while enjoying the potential for regular returns, paid in BTC to maximize efficiency and minimize exchange rate risk.

Abu Dhabi-based financial firm Aspen Digital, regulated by the Central Bank of the UAE, is providing early stage capital to the fund and will be the exclusive distributor of CBYF across the United Arab Emirates and Asia.

The fund is set to launch with an initial minimum investment of $5 million.

“We are seeing increasing demand for structured digital asset investment products that can be seamlessly integrated into private wealth and institutional portfolios,” added Andrews.