1. I'll mostly concede this one. You're right that investors can look at this index and mirror it, but any investor who does this should be thankful that Coinbase created this fund and gave them something to mirror!
2. Coinbase's main product lets you buy the coins, but storing them safely is another matter. Just wait until c0inbase.com sets up a duplicate site and buys Google ads for "coinbase" so it shows up above the real site in search results. Two-factor auth won't help because the fake site will just prompt you for the 2FA and immediately use it to log into your account on the real site. This isn't a hypothetical -- things like this happen all the time and target all of the most popular online bitcoin wallets.
The difference with an index is that there's no "withdraw crypto" button. Even if your account is hacked, the worst they can do is try to force you to sell your position -- and even that could probably be rolled back when you get in touch with Coinbase. The hacker couldn't take your money because adding a new bank account for withdrawal is slow and produces a bunch of emails to you. And even if they did add a new bank account and withdraw, that would generate a paper trail that could be used to undo the bank transfer or prosecute the thieves.
Setting up bank accounts with a fake identity is much harder than creating a new bitcoin wallet address to withdraw your stolen coins to.
3. Again, the lack of a "withdraw crypto" button makes all the difference. If that button exists, business partners will always be eyeing each other with suspicion, wondering if one of them is going to steal the coins and claim that a hacker did it. If it doesn't, there is no easy way for one partner to screw the others. The worst he could do is add his personal bank account and try to withdraw to it. Even if he succeeds, that will leave a huge paper trail. The other partners will know who did it and he'll soon discover that the FBI frowns on such things.
4. You're right that you don't avoid the taxation burden, but there is still a difference. First, the fund is more likely to have tax experts who can figure out how to minimize the tax burden from rebalancing. They'll be aware of tricks like tax loss harvesting that a random investor would find burdensome to implement even if they knew about them. Second, as an investor, getting a 1099 from an index fund makes my life simple because I can just copy a few numbers into TurboTax and be done. If I've been running and rebalancing my own portfolio, I instead have to download the year's worth of trade data and fill out IRS form 8949 with a list of all trades.