Singapore Exchange Huobi Launches Cryptocurrency ETF
Sinagapore-based cryptocurrency exchange Huobi has launched a cryptocurrency exchange-traded fund (ETF), allowing investors to gain investment exposure to the recently launched Huobi 10 index, which tracks the ten largest cryptocurrencies by market cap and liquidity traded on the Huobi exchange. ETFs allow investors to invest in a basket of assets, weighted by either market cap or price, rather than just individual assets. It is an effective diversification tactic, but unfortunately most exchanges’ attempts at launching cryptocurrency-based ETFs have been shot down due to strict regulations, especially in the US. Some critics argue that Huobi’s new ETF, known as HB10, is not a true ETF since it is not traded on a regulated securities exchange.
The ETF is open to both retail investors and institutional investors. While the ETF cannot be purchased using fiat currency, it can be purchased using bitcoin, ether, USDT, or Huobi tokens (HT). The minimum investment amount is about $100. The constituent coins in the ETF are as follows: HT, BTC, EOS, ETH, BCH, XRP, IOST, LTC, ETC, and DASH.
Huobi’s HB10 ETF is currently not available to U.S. customers due to a lack of definitive regulations surrounding cryptocurrency ETFs. Touting itself as the “weather vane of digital assets”, HB10 is groundbreaking for two reasons: it is one of the first cryptocurrency ETFs offered by an established exchange, and it is open to retail investors. Retail investors generally have large capital restrictions, preventing them from investing the minimum required amount in cryptocurrency index funds.
Huobi suggests that HB10 has the potential to help retail investors more easily diversify. They also claim it will help to smooth market volatility and “reduce the impact of institutional entry and exit” on individual cryptos. Huobi is one of a handful of firms that have created indexes to track cryptocurrencies, including Coinbase, Grayscale Investments, and Bitwise Asset Management. With this said, Huobi is the only firm offering a retail investor accessable ETF that tracks its index.