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Huobi Review

Huobi Review: The Next Crypto Exchange Superpower

Huobi in Brief

Chinese exchange Huobi markets itself as a “trusted world-class operation designed specifically for knowledgeable crypto-investors.” Although its global site is off-limits to people in the United States, Huobi’s strategy of opening local exchanges lets it meet the needs of everyone.

Read our Huobi review to find out more about on of the largest crypto exchanges in the world.

Pros

  • Available almost worldwide.
  • Trading fees can be lowered to 0.1%.
  • Margin trading.

Cons

  • Not available in China.
  • US subsidiary has limited number of coins and tokens.
  • Low trading fees require purchase of Huobi utitlity token.
  • High per-transaction withdrawal fees.
  • No stop-limit or other advanced orders.

What is Huobi?

Structure

Before getting into Huobi’s past a brief explanation of Huobi’s structure is needed. Huobi Group started as a Chinese company based in Beijing. That company has a Seychelles-registered and Singapore-based subsidiary, Huobi Global that handles the company’s operations outside China. Most of that activity happens through the www.huobi.com website and its apps.

To comply with regulations in specific countries, Huobi Global has opened exchanges in the United States (HBUSA), Australia, and Korea. The company has plans to open in Brazil and Canada as well as other markets. These local exchanges are built on Huobi’s global infrastructure while complying with the local country’s regulations of “virtual currency” businesses.

Huobi Group has several other subsidiaries.

  • Huobi Capital is the company’s investment arm and focuses on venture opportunities in the cryptocurrency and blockchain space.
  • Huobi Ecosystem is a network of blockchain-related companies that share resources and do business with each other.
  • Huobi Pool (also known as Firecoin Mining) is a mining pool and a voting platform on the EOS blockchain.
  • Huobi Labs is an incubator for new blockchain-based projects.
  • Huobi Cloud is a white-label crypto trading service. By turning its trading platform into a service, Huobi lets other companies set up their own branded digital exchange without needing any infrastructure or deep expertise.

History

Huobi, Mandarin for “fire currency”, was founded in Beijing by Leon Li in 2013. In a 2014 interview with Finance Magnates Li explained that after two years of corporate life at Oracle, he decided to become an internet entrepreneur. On the outlook for crypto, Li said:

“Digital currencies will become one of the most important inventions that fundamentally change the world’s economic and financial system in the Twenty-First Century.”

According to the company’s website today, it’s founding goal remains unchanged: “make the financial industry more efficient, and to make wealth more accessible to everyone.”

Leaving China

In late 2017, China’s financial regulators lowered the boom on the country’s cryptocurrency exchanges. First, it banned fiat-to-crypto exchanges, then it banned all initial coin offerings. Domestic exchanges soon followed, before China finally raised the Great Firewall and blocked all overseas exchanges.

Huobi issued a statement issued at the end of October, in which Li thanked everyone in the Chinese crypto community and announced that operations in China were closing:

”Many thanks to every Huobi user as well as our partners and colleagues. You are Huobi’s most valuable asset. With your trust and talent, I believe all challenges Huobi is facing today can be opportunities.”

Huobi Group, like it’s rival OK Group, reacted quickly by accelerating its global expansion plans. After setting up Huobi Global in Singapore, the company began opening its overseas exchanges, most recently in the United States.

Established player

Huobi now places among the top 10 exchanges on CoinMarketCap’s ranking of cryptocurrency trading volume. The company has offices in Japan, Hong Kong, Korea, Singapore and the United States and serves customers in more than 130 countries.

Leadership and investors

  • Leon Li, founder and CEO: Li worked for Oracle after graduating from Tsinghua University. He was soon engaged with the Chinese bitcoin community including startups in the bitcoin trading space.
  • Frank Fu, HBUSA chief executive officer: Huobi recruited Fu from Meitu, the developer of a photography app.
  • Adrian Harrison, Huobi Australia chief executive officer: Harrison’s career has crossed the Australian and Asian financial industry. Most recently, he was a business development director at fintech company NEX.
  • Lester Li, European exchange director: Prior to joining Huobi, Li worked at a series of Chinese investment firms, most recently fintech investment house Chinese Renaissance.
  • Chris Lee, vice president of global business development: Lee heads up Huobi’s mergers and acquisitions group and is the former CEO of rival Chinese exchange OKEx. Lee previously founded several different startups in the blockchain industry.

Investors

Huobi’s seed money came from the ZhenFund. A Series A round conducted in 2014 was led by Sequoia Capital.

Protecting customers’ coins

Legal and regulatory compliance

Huobi has structured its entire business around regulatory compliance by moving its international operations out of China as well as opening subsidiary exchanges in the United States and other countries.

That does not mean, however, that Huobi embraces regulation. CoinTelegraph reported in 2014 that Huobi joined fellow Chinese exchanges OKEx and BTCChina in a letter to New York’s Department of Financial Services. In that letter, the exchanges criticized the burdens proposed BitLicense regulations would impose on their business.

In particular, they did not understand “why such sweeping regulations should apply when we have little meaningful business in New York State.” Providing fingerprints of all employees to the FBI and reporting their global finances to New York regulators were just some aspects of the regulations they objected to.

According to Huobi Global, Goldman Sachs advises on security and risk control to ensure the company has strong internal processes.

In the United States, HBUSA is registered with FinCEN as a money services business, which requires the company to comply with the Bank Secrecy Act and the USA Patriot Act. The exchange also complies with the regulations of each state it operates in (and does not operate in states where it does not comply).

Coin listing policies

Huobi algorithm evaluates coins
Source: Huobi

Huobi takes a more methodical approach to listing new coins than many other exchanges. A team must be able to demonstrate that their project has:

  • A large, active community.
  • A strong, multidisciplinary team.
  • A technology that offers practical benefits.
  • Complies with all regulatory requirements.
  • Published whitepapers and regular status reports.

Besides being reviewed by Huobi’s listing panel, the project must pass through Huobi’s SMARTChain Blockchain Asset Assessment Model. The algorithm assesses projects based on a matrix of 51 variables to produce scores for a project’s Potential and its business and regulator Risk. Only projects that score a Potential score greater than 60 and a Risk score lower than 35 get considered.

Network security

Huobi’s director of security, Wang Huaiqiang, spoke with CoinTelegraph in 2015 about recent high-profile hacks and his company’s response. “Besides multisig wallets,” Wang explained, “we set up many measures to make our system work securely without integrity of one server or one employee.”

Beyond that interview, Huobi only provides a high-level overview of its security measures:

  • Advance DDoS-mitigation layer.
  • Multi-factor authentication.
  • Encryption in transit.
  • Encryption at rest.
  • Inactivity time-outs.

Huobi provides 2-Factor Authentication (2FA), but does not require its members to use it.

Customer support

Huobi provides a well-documented knowledge base as well as a ticketing system for account-specific issues.

Huobi reputation

Huobi's research
Source: Huobi

Huobi is a popular exchange in Asia with a growing reputation in the rest of the world. Part of that reputation is due to the exchange’s efforts to foster its community of traders.

Novices and experts alike will find a wealth of resources on Huobi’s website. Analysis from Huobi Research provides advanced traders insights into the trends shaping the crypto industry to help them anticipate market shifts.

The website’s Asset Introduction page provides new traders with background information on the digital currencies Huobi lists. For more information, traders can follow links to the cryptocurrency’s official website and block explorer.

Huobi Knights

To foster its community and help on-board novices, Huobi created the Huobi Knights program. Members of the program organize events, answer users’ questions and provide feedback on new features. In exchange, Huobi gives the Knights trading rebates, swag and other perks.

How to Join Huobi

Who can join?

Huobi’s primary website is available nearly worldwide. Residents of the United States are strictly prohibited from trading on the global exchange.

Within the United States, residents of almost all states and the District of Columbia are free to join Huobi’s US exchange. The restricted states are Alabama, Connecticut, Georgia, Louisiana, New York, North Carolina, Hawaii, Vermont and Washington.

Verification

Individual accounts

A simple registration on the Huobi’s global site only requires an email or SMS verification. Once registered, you are free to deposit, trade and withdraw cryptocurrency. Huobi does set limits and fees for that activity which you can change by going through the full verification process.

Full verification takes 24 hours to complete. Users must enter their nationality, passport number and name. They must also upload a scan of their passport or another government-issued identification document.

Customers of Huobi’s American subsidiary must provide verification information in order to begin trading. The more information you provide, the more you can move in and out of your account:

  • Level 0 – $2,000 per day, $10,000 per month – Only requires name, address, birthdate, email address and mobile number.
  • Level 1 – $20,000 per day, $100,000 per month – Requires social security number or tax ID number.
  • Level 2 – $200,000 per day, $1,000,000 per month – Requires scans of a recent bank statement and proof of residence.

Business accounts

Businesses that want to trade on Huobi must first create an individual account and then submit a Google Docs-based application form. The business application must include the following information:

  • Corporate name & corporate nationality
  • Name of authorized person
  • Contact information of an authorized person
  • Huobi User ID
  • IDs of board directors, shareholders and ultimate beneficiary
  • IDs of authorized account holders and operators
  • Business license or another official certificate of incorporation
  • Official proof of the relationship with board directors and shareholders
  • Board resolution
  • Letters of commitment
  • Power of attorney

What Can You Trade on Huobi?

Huobi's exchange for utility token holders
Source: HADAX

Cryptocurrencies

The global site has 258 trading pairs grouped within base markets of bitcoin, ether, tether and Huobi’s own utility token.

In the United States, Huobi’s trading options are much more limited. There are only 19 trading pairs distributed between base markets of bitcoin, ether, tether and trueUSD.

Huobi Token

Huobi introduced its own utility token, the HT, to build community engagement and keep more liquidity in the exchange. Members can earn HTs by trading, becoming Huobi Knights and other activities. A dedicated site for HT trading, called HADAX, duplicates many of the main site’s features but earns users more points. Among the benefits users get:

  • Trading fee discounts
  • HT buybacks
  • Rewards and perks for being an OTC merchant
  • Access to exclusive events
  • Voting rights on listing decisions

Since Americans can’t use the Huobi Global exchange, they cannot earn or own HTs.

Fiat currencies

Peer-to-peer trading on Huobi
Source: Huobi

Huobi is a pure cryptocurrency exchange and does not support trades in fiat. However, it does provide a peer-to-peer trading service for its global customers called Huobi OTC. Much like LocalBitcoins, Huobi OTC lets buyers and sellers find each other and negotiate trades directly. Sellers are free to set whatever price and payment method they want. They may also ask for verification information.

One thing to note, however, is that most of the OTC sellers are there to serve customers in Singapore and China. Huobi OTC is not available through the US site.

Currency exchanges

You can place market or limit orders through the trading site. Huobi sets minimum and maximum limits on the size of each trade. These limits vary by trade type and from trading pair to trading pair. While you can see each limit in the trading interface, Huobi’s help site has consolidated them into a single list of trade size limits.

Advanced trading

The only advanced trading feature Huobi offers is margin trading up to 3X. Leveraged trades are only available on pairings of bitcoin, dash, ether, ether classic, litecoin, omisego, ripple, tether, and zcash. Users must set up and fund a separate Margin Account before they can place margin orders.

Institutional investors can get early access to HB10, Huobi’s exchange-traded fund. The basket of cryptocurrencies tracks the company’s Huobi 10 Index and lets investors profit from cryptocurrencies without purchasing coins directly.

Trading Tools and Fees

Trading interface

Huobi provides an advanced trading interface called Huobi Pro. It provides charts of market trends with analytical tools to help traders anticipate the market’s direction.

Analyze trends on Huobi
Source: Huobi

Once ready to trade, the order entry the interface provides forms for market or limit orders.

Making trades on Huobi
Source: Huobi

The interface also provides a brief overview of each coin and token with links to websites and white papers for more information.

Huobi provides background about coins
Source: Huobi

The American interface looks a little different, but it’s powered by the same platform as the global site.

Huobi's US exchange
Source: Huobi USA

Although the number of markets available through Huobi USA is smaller, you get the same analytical tools.

Trend analysis on HBUSA
Source: Huobi USA

Another difference is the lack of margin trading on Huobi’s US exchange.

Placing orders on Huobi USA
Source: Huobi USA

Mobile app support

Huobi''s trading apps
Source: Huobi

Huobi provides apps on Android and iOS that let you place trades and track market data. On average, users on the Google Play Store give the app a 4-star review. A lot of the recent complaints focus on the verification screen where dragging an icon across the screen fails to unlock the app.

Feedback on the Apple App Store is much more positive. The average of more than 4,600 reviews is 5 stars. Having said that, you may want to take the app store ratings with a grain of salt. The distribution of reviews looks very skewed with a scattering of 1-star reviews, no reviews with 2, 3 or 4 stars and almost 100% of the reviews in the 5-star range. Even the Fortnite app gets some criticism.

Huobi also offers two other apps: a digital wallet app and an OTC trading app. The wallet supports bitcoin, bitcoin cash, ether, ether classic and litecoin. The OTC app provides mobile access to Huobi’s peer-to-peer trading service. Neither app has more than a handful of reviews. Those reviews are mostly negative.

Deposits and withdrawals

Fiat currencies

You cannot deposit or withdraw fiat.

Digital currencies

Huobi sets limits on how much cryptocurrency you can deposit and withdraw per instance and per day. Those limits are set much lower for unverified users. Bitcoin transactions, for example, are capped at 0.1 BTC per instance and 0.1 BTC per day. Verified users, on the other hand, can move up to 200 BTC in and out of their Huobi account per instance and per day.

Transaction fees

Although Huobi has designed its trading platform around a maker-taker structure, the exchange only applies a flat 0.2% fee on all trades. Members of the VIP program can get discounts on their trading fees ranging from 10% to 50%. Joining the VIP program only requires payment of at least 30 HTs

In the United States, most traders pay a 0.1% fee without any volume discounts. Traders can apply to become market makers. Market makers do not pay fees.

Traders using leverage will have to pay interest on the coins they borrow. For most of the supported cryptocurrencies, the interest rate is 0.2% per day. For loans of tether, the interest rate is 0.1%.

Unlike many exchanges, Huobi charges cryptocurrency withdrawal fees. A litecoin withdrawal, for example, will cost unverified and verified users alike 0.001 LTC  These fees are in addition to any mining fees the transactions incur.

Final Word

China’s actions against the domestic cryptocurrency industry forced Huobi to become a global player. By opening local exchanges in the United States and other heavily-regulated markets, Huobi does not have to subject other people around the world to those laws. Beyond its business strategy, the exchange offers something for novice cryptocurrency traders and experienced traders alike.

For new traders

The resources and community that Huobi has developed help new traders get up to speed quickly. Once their skills and confidence grows, they can dive into some of Huobi’s more interesting features. However, the relatively high fees on withdrawals may be an issue for people who treat the exchange as a way to swap currencies for use elsewhere.

For advanced traders

Withdrawal fees aren’t as important for advanced traders, who will likely focus their activity within the exchange. For them, Huobi’s large number of trading pairs are the main attraction. The relatively high 0.2% trading fees, however, may turn them away or force them to buy the HT utility tokens.

Christopher Casper

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