Huobi, one of the biggest cryptocurrency exchanges in the world has been on an expansion spree. The exchange has been expanding their presence across various countries - and are also working on expanding their services and offerings. In the latest update, Huobi has launched an Exchange-Traded Fund, which the company claims to be the world’s first ETF for retail investors!
Huobi has named this ETF as ‘HB10’. It allows investors to buy shares based on Huobi’s recently launched benchmark index - Huobi 10. Those looking forward to be a part of this Exchange-Traded Fund can do so by investing bitcoin, ether, USDT, as well as Huobi tokens.
What is an Exchange-Traded Fund (ETF)
For those who may not be aware of what an ETF is and how it functions, here’s a quick look at it:
An Exchange-Traded Fund (ETF) is basically a type of a mutual fund which divides the ownership of an asset (cryptocurrencies in this case) in shares. The fund keeps monitoring the value of these assets and makes investments accordingly. Investors make a profit on how the fund performs and can make long-term or short-term investments.
Understanding Huobi’s HB10 ETF
As per Huobi, this HB10 Exchange-Traded Fund will be based on the Huobi 10 index, which was launched by Huobi primarily to monitor and measure 10 different assets on the Huobi Pro exchange in real time. The index keeps a track of these currencies depending on their market cap as well as liquidity ratio.
The Huobi 10 index makes use of weighted samples to measure the final market performance of these currencies on the Huobi Pro platform. Huobi claims that HB10 will help reduce the risks for investors as well as provide them with benefits associated with a range of cryptocurrency assets.
As of now, only the investors from countries which are supported by Huobi Pro can invest in this fund. This means that US-based investors cannot invest in the platform yet. However, they will be able to do it once Huobi Pro begins to support the US jurisdiction.
Open for Retail Investors
One of the biggest highlights of this Exchange-Traded Fund is the fact that it is open for retail investors. In the past, there have been several major names which have started off similar investment funds and ETFs. However, most organizations have their focus set on larger players and retail investors are never given the chance to invest because of their limited investment capacity.
Most other cryptocurrency funds have a very high entry point - such as Coinbase with $250,000. These amounts are not possible to invest for most retail investors. Huobi, however, welcomes everyone on board.
Institutional investors have the purchasing power which allows them to make much bigger deposits than retail investors. However, with Huobi launching an Exchange-Traded Fund for retail investors, the platform has now opened the doors for small-cap players to also try out this form of an investment. While institutional players are expected to contribute to a massive chunk of the capital flowing through this ETF, it is expected that retail investors would also be a focal point for Huobi.