Coinbase has announced that its cryptocurrency index fund is now available to investors in the US. The company launched the fund in March this year. The announcement comes just a few days after Coinbase announced that it was adding Ethereum Classic to its exchange.
Responding to growing interest among investors
In a blog post, the company said it had taken the move to open to U.S investors after it received a lot of interest from potential investors. The company indicated that it is targeting investors who want to invest between $250,000 and $20 million. For a start, Coinbase says the fund is only available to accredited US investors. This is a big deviation from the general norm that crypto is open to everyone. Coinbase is specifically targeting institutional investors. This is after it recently added services for Wall Street-focused professional investors.
Why US investors only?
According to the Securities and Exchange Commission (SEC) listing guidelines, a company that intends to offer its securities to the public must file for registration of the securities with the SEC or find an exemption from the registration requirements. Currently, the SEC does not seem to be interested in registering any exchange traded funds (ETFs) or cryptocurrency index funds. This means the only way for Coinbase is to offer what is classified as an unregistered security so as to get an exemption from the registration requirements. Among the exemptions is Rule 506 of Regulation D, which allows companies to sell securities to accredited investors.
The company says it is offering its fund in the US so as to enable accredited investors to gain access and exposure to different types of digital assets which are listed on Coinbase Pro and weighted by market capitalization.
According to Rule 501 of Regulation D, accredited investors are those that have a net worth of $1 million or a consistent annual income of no less than $200,000 or a combined income of $300,000 with spouse. According to the rule, a company is considered accredited if all its equity owners are accredited investors.