Coinbase Launches Bitcoin Yield Fund for Non-U.S. Institutions with 4%-8% Annual Return

Coinbase Asset Management is set to introduce the Coinbase Bitcoin Yield Fund on May 1, 2025, exclusively for non-U.S. institutional investors. This fund is designed to offer a new avenue for generating yield on Bitcoin holdings, with an annualized net return projected between 4% and 8%. The strategy behind the fund revolves around basis trading, which exploits the price difference between the Bitcoin spot price and its perpetual futures price. When the Bitcoin price is on the rise, the gap between these prices can widen, creating opportunities for profit. The yields from this fund will be paid out in Bitcoin.

Coinbase has emphasized that while basis trading is generally considered a low-risk strategy, there have been instances where excessive leverage has led to significant losses. To mitigate this risk, the Bitcoin Yield Fund will employ only modest leverage and prioritize security by storing assets with Coinbase and other qualified custodians. Sebastian Bea, President of Coinbase Asset Management, highlighted the fund's conservative and compliant investment strategy, stating that it is well-suited to provide institutions with reliable and compliant investment vehicles for digital assets.

The fund has already garnered early support from firms like Aspen Digital, a wealth management platform based in the UAE. This move by Coinbase comes amid a growing demand for institutional-grade Bitcoin yield products. Earlier this year, initiatives like lstBTC, launched by The Core Foundation in partnership with Maple Finance, BitGo, Copper, and Hex Trust, allowed users to deposit Bitcoin with custodians and mint a liquid token that accumulates yield over time. Similarly, Securitize Credit collaborated with digital asset trading firm QCP to increase returns from Bitcoin basis trades by using BlackRock’s USD Institutional Digital Liquidity Fund as collateral, reporting annualized returns exceeding 20%.

The Bitcoin Yield Fund will be available for subscription and redemption on a monthly basis, with a five-day notice period. The fund has an estimated capacity of $1 billion, and qualified custodians will manage the storage of assets. Aspen Digital, a digital asset manager based in the UAE, is one of the initial investors and will serve as the exclusive distribution partner for the fund across the UAE and Asia. This launch coincides with increasing institutional interest in Bitcoin, with various institutions announcing plans to launch significant Bitcoin investment ventures. The fund's conservative strategy and focus on risk management are likely to attract institutional investors who are cautious about entering the crypto space, providing a compelling option for institutions looking to diversify their portfolios while minimizing risk. The launch of the Bitcoin Yield Fund is expected to further fuel institutional momentum for Bitcoin products, as more investors seek to capitalize on the growing interest in digital assets.