Third Largest Crypto Exchange Launches Crypto-Based Exchange Traded Fund

Huobi, the world's third largest cryptocurrency exchange by volume, is launching a crypto-based exchange traded fund today, June 1, according to a company announcement May 31.

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.

Huobi's new ETF - called 'Huobi 10' - is based on its recently launched market index, which tracks the exchange's 10 top-traded digital assets against Tether in real time, using a weighted average calculation method.

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.

Huobi's ETF is now open for subscriptions, with an option to pay using either Tether, Bitcoin, Ethereum or Huobi's native token.

Crypto-based ETFs have long been discussed as a potential 'holy grail' for the crypto industry.

Although a few are already being traded in certain countries - including a Bitcoin-only ETF on the NASDAQ Nordic exchange - ETFs are considered to be a marketable security that requires regulation by government authorities, and their mainstream future in crypto awaits clarification.

In the US, the Securities and Exchange Commission continues to debate crypto-based ETFs, having raised concerns over liquidity, volatile valuations and the risks of fraud and market manipulation.

The SEC rejected a Winklevoss ETF in March 2017, and this January, two Bitcoin-related ETF proposals were withdrawn at the regulator's request.