While U.S. traders continue to wait for regulatory clearance for the cryptocurrency-based exchange traded fund (ETF), other marketplaces across the globe are taking the lead in launching the popular product that offers dual benefits of stock-like real-time trading and mutual-fund-like diversification.
Now, cryptocurrency trading platform Huobi is launching a crypto-based exchange-traded fund (ETF), an investment option that will allow retail investors to gain exposure to a basket of assets instead of just one at a time.
The company said in an announcement on Friday that the investment instrument – called HB10 – is now open for subscriptions, though it only accepts purchases using cryptocurrencies instead of fiat currencies.
What is an ETF?
An ETF is a financial derivative, more specifically a type of mutual fund that divides ownership of underlying assets – in this case crypto assets – into shares. The ETF tracks the value of these assets and is tradable during the working hours on an exchange. Shareholders are entitled to a share of the fund’s profits, which are based on either longer-term earned interest or short-term speculation on daily market fluctuations.
‘Huobi 10 Index’, will track 10 popular crypto coins that are traded against USDT (USD Tether) on its platform. The 10 component cryptocurrencies of the Huobi 10 index include,
Huobi suggests the new investment instrument will potentially help new users to gain exposure to the crypto markets by giving them a stake in a diversified basket of assets. This would reportedly allow investors who do not want to follow individual crypto assets to buy into the general market trend and disregard the ‘noise’ of individual coins.
The exchange charges a tiered trading fee that reduces to zero based on the invested amount. Investments up to 500,000 USDT is charged 0.10% fee, between 500,000 to 1 million USDT is charged 0.05%, and between 1 million to 10 million is charged a zero fee.
The HB10 ETF will also offer ease of investments in a mixed basket of cryptocurrencies to the institutional as well as retail investors. While the cryptocurrency ETF will be available to global investors including those in China, it is currently not available to the U.S.-based customers owing to the local regulatory stalemate in America over the cryptocurrency-related ETFs.
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