Coinbase Asset Management is launching a new investment product for institutional investors to earn passive income on their bitcoin.
The Coinbase Bitcoin Yield Fund (CBYF) goes live on May 1, 2025 and will pay 4% to 8% annual net returns in bitcoin.
This product is available to non-U.S. institutional investors only. Investors will subscribe and redeem by depositing and withdrawing bitcoin each month.
Unlike some altcoins which allow holders to earn passive income through staking, Bitcoin doesn’t have a native yield-generating mechanism.
As Coinbase wrote in its blog post:
“Bitcoin yield funds have emerged to address this limitation, but these funds generally require institutional allocators to take on significant investment and operational risk.”
To reduce these risks, Coinbase designed CBYF to follow a conservative investment strategy.
Instead of lending bitcoin at high interest rates or engaging in risky trading tactics, the fund will use a “cash-and-carry” strategy — a well-known technique in both traditional and digital asset markets.
In this strategy, the fund takes advantage of price differences between bitcoin’s spot market price and its perpetual futures contracts (perps) which are futures that don’t expire.
When markets are bullish, these price gaps can widen and offer consistent returns.
Sebastian Bea, President of Coinbase Asset Management said, “Coinbase AM believes the next cycle needs better products to enable institutional investment in digital assets.”
He added, “We believe the Bitcoin Yield Fund is particularly well suited to the task, given its conservative and compliant investment strategy.”
Coinbase is taking extra precautions. The fund won’t move bitcoin out of storage and instead uses third-party custody integrations for trading.
This approach, according to Coinbase, “significantly reduces counter-party risk.”
Moreover, the CBYF won’t do high-interest bitcoin loans and systematic call-selling strategies that have led to losses in other funds in the past.
Coinbase said while a small amount of leverage might be used, it will be kept at a low level to maintain a safer risk profile.
On-chain analytics showed an increase in bitcoin transfers to exchanges after the announcement. This could mean institutions are positioning themselves to invest in the new fund.
Meanwhile bitcoin is still above $90,000 in late April and analysts are watching the $94,000-$95,000 resistance zone for a potential breakout to new all-time highs.
Ryan Lee, Chief Analyst at Bitget Research said, “Retail interest may surge if bitcoin breaks $100,000, fueled by media hype and FOMO.”
Coinbase Asset Management says they have calibrated the CBYF to meet fiduciary standards and institutional risk appetites, making bitcoin investment more appealing to big financial players.
Coinbase Asset Management offers solutions that help institutional investors get into the Bitcoin space by combining traditional investment expertise with digital asset knowledge.
