The U.S. firm, the largest cryptocurrency company in the world and most recently valued at $1.6 billion, has formed a subsidiary called Coinbase Asset Management to oversee the new Coinbase Index Fund, product lead Reuben Bramanathan told Reuters.

The fund will give investors exposure to all assets listed on Coinbase's institutional exchange, GDAX, weighted by market capitalization, Bramanathan said. Whenever a new asset is listed, it will be automatically added to the fund.

"We're seeing strong demand from our customers and the market generally for a passive investment management product," Bramanathan said.

He said the investment product has long been in the company's roadmap, "but we're finally seeing demand so that's why we're just launching now."

For now, the fund will only be available to U.S.-resident accredited investors. Bramanathan said Coinbase is working on launching more funds that are accessible to investors and cover a broader range of digital assets.

The new fund will track the Coinbase Index to be launched as well, which is a benchmark of the performance of all assets listed on Coinbase. Digital currencies listed on Coinbase are bitcoin, bitcoin cash, ethereum and litecoin.

Every time a new asset is listed, the index will automatically be rebalanced to include it, Bramanathan said.

The cryptocurrency boom has seen a plethora of digital currency hedge funds and index funds launched in the market.

According to data from Autonomous NEXT, there are now 225 crypto funds across seven strategy types, with assets in the space estimated at $3.5 billion to $5 billion.

The diversification of strategies reflected a market that combined cryptocurrencies with software, putting hedge fund managers and venture investors into the same exchange, Autonomous NEXT said.

Coinbase's Bramanathan said most of those funds are actively managed funds, and there is a big gap or demand for index funds that enable investors to track the performance of an entire asset class, rather than trying to pick winners.

Earlier reports said Coinbase told shareholders it posted revenue of $1 billion in 2017, bolstered by a frenzy of applications and trading as the price of bitcoin and cryptocurrencies surged in the last two months of the year.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Leslie Adler)

By Gertrude Chavez-Dreyfuss