In April, Huobi expanded into South Korea. This was followed by their participation in a $1 billion blockchain industry fund in May. Now, the Asian digital asset exchange has made another major move by adding Exchange Traded Funds (ETFs) to its list of digital product offerings on June 1, according to their announcement.
An ETF is a tradeable security that tracks an index, a commodity or other tradeable assets. In this case, the ETF will enable people to invest in a basket of cryptocurrencies. The HUOBI 10 (HB10) fund will be pegged to the HUOBI 10 index of the top 10 digital currencies based on market cap and liquidity. The fund is now open for subscriptions, and users may purchase subscriptions with various cryptocurrencies including USDT, BTC, ETH, and the ERC-20 Huobi Token (HT).
The fund will fully replicate the HUOBI 10 index, rebalanced against the coin trading pairs and their weight changes. Minimum investments are small, meaning that users can easily invest in a group of digital assets with a minimum investment of 100 USDT, and a maximum of 10 million USDT (approximately $100 – $10 million USD). Subscription fees range from 0% to 0.10%, depending on volume.
The HB10 valuation is determined by measuring the constituent coins in the portfolio against their USDT prices on Huobi Pro, updated in near real-time every 15 seconds. Once purchased, the fund is tradeable on the Huobi Pro platform, subject to the exchange’s current restrictions which limit people in China, and block US investors due to regulatory concerns.
The US Securities and Exchange Commission (SEC) has expressed a negative position on virtual currency ETFs. In a recent, open letter, Dalia Blass, Director of the Division of Investment Management at the SEC stated, “there are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors.” While the SEC did contextualize that concern within a very positive outlook for cryptocurrency trading as a whole, it will take considerable work to move them to a more favorable position.
This ETF is just one component of Huobi’s expansion. In addition to the aforementioned moves, the company is also opening an office in Brazil. As the third largest cryptocurrency exchange in the world, by volume, it is clearly vying for the #1 position. While no official announcement has been made, they have opened an office in a WeWork location in São Paulo. They are also actively advertising a position for a Digital Marketing Manager, and a Chief Compliance Officer to work out of that location.
Huobi is also opening an office in Toronto, Canada, as well as a branch in San Francisco, California, despite regulatory concerns about the US market. They’re also looking into Japan, having recently attempted a partnership with the Japanese investment group, SBI Holdings, which fell through after regulators prevented them from moving forward.
With this move into ETFs, Huobi will have a product available that is currently absent from other exchanges. If it’s successful, we may see a migration of users to their platform.