Huobi Exchange Introduces Margin Trading, Interest Accounts to Bitcoin

One of the Chinese biggest exchanges, Huobi, is adding margin trading and interest accounts to bitcoin, making industry-first move designed to provide more ‘traditional’ financial products to serious cryptocurrency traders.

The company’s new platform, called BitVC, and it is a Hong Kong-listed subsidiary company with a margin trading platform that supports both bitcoin and litecoin.

In addition to this news, bitcoin exchange is launching a new brand called Yubibao. It is supposed to work in conjunction with BitVC. Yubibao is a new and rare thing in the world of bitcoin, it is described as savings account that makes daily interest payments available to its users.

The mechanism is pretty simple, the users of BitVC deposit funds into their Yubibao accounts, where those balances can be borrowed by traders. A good thing is that deposits and withdrawals can be made instantly.

Even though there are other platforms that offer person-to-person lending, e.g. Bitfinex, the problem is that users there must line up for loan offers.

The main advantage of Yubibao system is that it is really good for lenders as they can start receiving interest immediately. Moreover, users can also just deposit money into a Yubibao account and there is no need for them to monitor operations and issue new loans. The current daily interest rate is flowing around the 0.02-03% mark.

Robert Kuhne from Huobi mentioned that the current functions of Yubibao look much like a traditional bank account, as a matter of fact it will be more attractive for those users who are looking to make a passive return on their investment.

He also added that It is safe for investors:

“Users do not bear any risk of loss in leveraged transactions because the BitVC system manages the loans to borrowers and automatically issues margin calls when necessary to ensure that the borrower’s assets can cover the loans.”

Actually Yubibao sounds like a really good option in regards to safety, moreover BitVC says it holds enough reserves of bitcoins that will guarantee all user funds deposited in Yubibao and if a any losses happen it will be backstoped Furthermore, the company will be responsible for all liquidity risk.

Margin trading is just the first feature added by BitVC, however the company already has plans to support cryptocurrency derivatives and other “innovative financial products”, all based on Huobi’s API.

BitVC is currently an invitation-only beta, but is planned to open up for public registration at the end of July. Those who are interested are welcome to send their request to receive an invitation via Huobi’s official accounts on either twitter or reddit.

BitVC registered in Hong- Kong  will be the more financially adventurous platform, and is expected to have a more international customer base. Moreover, even though the government pressure was rising the Chinese exchanges increased and still are increasing efforts to find overseas customers and areas of development in the crypto currency world. 

Huobi specifies it is more than satisfied with its growth over the past year. Moreover, according to Bitcoinity the exchange’a cumulative volumes accounts to16.6 million BTC, that’s more than any other exchange in the world.

ZhenFund, a Chinese seed fund that works in collaboration with Sequoia Capital China has recently invested in Huobi.