Beijing-headquartered company Huobi announced today that it would issue its own digital token, based on the Ethereum ERC 20 standard. The company said that the issuance of the ‘Huobi Token’ (HT) was scheduled to start on January 23 and that the token’s supply capped at 500 million. Of those, 300 million will be sold to users over 15 days, while the remaining tokens will be kept by Huobi.
The company also said that it would use 20% of its quarterly profits to buyback the Huobi Tokens in the open market. The company intends to store the repurchased tokens in a reserve fund dubbed the Huobi Investor Protection Fund.
The announcement comes a few months after the Chinese authorities issued a ban on domestic initial coin offerings (ICOs) – the mechanism that allows companies to raise capital by issuing ERC 20 tokens – and local cryptocurrency exchanges. However, Huobi insisted that the upcoming HT issuance is not an ICO. Instead, the company sees them as a way to gather service fees upfront.
Users will be able to get HT only by purchasing a service fee package on Huobi Pro using Tether (USDT) – the USD-pegged digital token.
“For example, if you purchase the 1,000 HT package, it will only cost USDT 990, and you will get 1,000 HT for free. HT can be used for offsetting the trading fees,” the company further explained, as quoted by Coindesk, which reported on the story earlier today.
Huobi, which was one of China’s largest cryptocurrency exchanges, has suffered a heavy blow in the wake of China’s crackdown on centralised platforms. Since then, the company has made several moves to recover its business, including launching an over-the-counter trading platform (Huobi Pro) and expanding to overseas markets. Nevertheless, the negative impact on its business had been significant, the company’s founder Leon Li revealed in an interview with Coindesk.
“We closed the trading book service on Sept. 15 and opened the crypto-to-crypto trading on Nov. 1 in 2017. The volume on Nov. 1 was about four to five percent of that on Sept. 15,” Li said.
He also said that the ultimate goal was HT to become an asset that connected users through Huobi’s overseas exchanges. The company is expected to launch new trading platforms in Japan and South Korea in March and is also eyeing an expansion to the US.