TLDR
Coinbase is launching a Bitcoin Yield Fund on May 1, 2025 for institutional investors outside the US
The fund targets 4-8% annual returns on Bitcoin holdings
Yield will be generated primarily through basis trading (the spread between spot and futures markets)
Abu Dhabi-based Aspen Digital is backing the fund as an exclusive wealth-distribution partner
The fund aims to lower investment and operational risks compared to other Bitcoin yield products
Coinbase, the world’s third-largest cryptocurrency exchange by volume, is set to launch a new Bitcoin yield-generating product aimed at institutional investors. The Coinbase Bitcoin Yield Fund (CBYF) will open on May 1, 2025, offering non-US institutional investors a way to earn passive income on their Bitcoin holdings.
The fund targets annual net returns of 4% to 8% on Bitcoin holdings, according to a recent announcement from Coinbase Asset Management. This new offering comes as institutional interest in cryptocurrency continues to grow, with Bitcoin ETFs recording over $3 billion in inflows in the second-highest week on record.
Unlike cryptocurrencies such as Ethereum and Solana, Bitcoin does not offer staking capabilities for holders to earn passive income. This limitation has created a gap in the market that Coinbase aims to fill with its new yield fund.
“Bitcoin yield funds have emerged to address this limitation, but these funds generally require institutional allocators to take on high investment and operational risk,” Coinbase stated in its announcement.
How the Fund Works
The CBYF will initially generate its returns through basis trading, a strategy that profits from the price difference between spot Bitcoin and futures contracts. This approach is less risky than lending-based yield products that have faced troubles in the past.
According to Abu Dhabi-based Aspen Digital, one of the fund’s backing partners, lending and options strategies may be added in the future. Aspen Digital will also serve as an exclusive wealth-distribution partner across the UAE and Asia.
This strategy differs from failed yield platforms like BlockFi, which relied on lending to generate returns. The basis trade has been popular among hedge funds, with short positions on Bitcoin futures reaching a record $14.2 billion in late 2024.
The fund includes several key features designed to attract institutional investors. It will have monthly openings for subscriptions and redemptions with five business days’ notice, qualified custodians, and an estimated strategy capacity of $1 billion in assets under management.
Coinbase has designed the fund to minimize risks associated with traditional Bitcoin yield products. Rather than moving assets out of storage, Coinbase Asset Management uses third-party custody integrations to trade, which they believe reduces counterparty risk.
The fund also avoids high-interest Bitcoin loans and systematic call selling, strategies that carry higher risk profiles. This conservative approach aligns with the risk appetites of most institutional investors.
Bitcoin’s price has shown strong recovery in recent weeks, rising more than 9% in the week leading up to April 28, largely supported by ETF inflows and corporate buying. The cryptocurrency was trading at around $94,000 at the time of the announcement.
Ryan Lee, chief analyst at Bitget Research, noted that retail interest in Bitcoin has been lagging despite the price recovery. “Retail interest may surge if Bitcoin breaks $100,000, fueled by media hype and FOMO,” Lee stated.
Industry experts are watching the $94,000-$95,000 resistance level for signs of potential retail re-engagement in the market. Some, like BitMEX co-founder Arthur Hayes, have predicted that this might be the “last chance” to buy Bitcoin below $100,000.
The Coinbase Bitcoin Yield Fund is another sign of growing institutional adoption of cryptocurrencies. As these large players continue to enter the market, new financial products are being developed to meet their specific needs and risk profiles.
As institutional crypto adoption grows, Coinbase Asset Management aims to provide solutions that blend traditional investment experience with digital asset expertise, removing barriers for institutional investors subject to fiduciary standards.
The fund officially launches on May 1, 2025, and is currently available only for international investors outside the United States.
