Bitwise Asset Management has submitted a formal S-1 registration statement to the U.S. Securities and Exchange Commission (SEC) to get permission to introduce a spot exchange-traded fund (ETF) directly linked to HYPE, the native token of the Hyperliquid blockchain.
The fund, if authorized, would be the first exchange-traded fund (ETF) to provide investors with regulated exposure to a prominent decentralized finance (DeFi) protocol, outside of the well-known Bitcoin and Ethereum products that have recently entered the U.S. market.
Hyperliquid ETF Structure
The proposed Bitwise Hyperliquid ETF would hold physical HYPE tokens in a custody account managed by Coinbase Custody Trust Company. By holding the tokens directly, the ETF aims to allow investors to participate in HYPE price movements.
This will be achieved through traditional brokerage accounts, eliminating the need for self-custody or direct interaction with the Hyperliquid blockchain. The ETF would use a daily net asset value (NAV) benchmark calculated by a designated provider to reflect market pricing.
According to the filing, shares of the ETF offer creation and redemption in kind. This means authorized participants can exchange ETF shares directly for HYPE tokens rather than cash. This in-kind mechanism, approved by the SEC for crypto products in July, aims to minimize costs and operational friction compared to traditional methods of cash creation and redemption.
Competitive Landscape and What’s Ahead
Hyperliquid operates as a Layer 1 blockchain focused on perpetual futures trading and other decentralized finance applications. The protocol’s HYPE token serves as a utility asset. It grants users reduced fees on the decentralized exchange and acts as the native currency for transaction payment.
As interest in DeFi has grown, Hyperliquid’s trading volumes have fluctuated, with competition intensifying from rival platforms like Aster.
Bitwise’s filing does not yet specify the exchange where the ETF’s listing will be, the fund’s ticker symbol, or its fee structure. The application falls outside the SEC’s newly adopted generic listing standards for spot crypto ETFs. This is because there are no regulated Hyperliquid (HYPE) futures contracts available for surveillance. This means the fund faces a standard extended review period.
The Bitwise Hyperliquid ETF’s approval may be a significant step forward for mid-sized DeFi tokens, enhancing market credibility and increasing capital availability for blockchain-based finance. The SEC is still examining goods for custody, compliance, and investor protections, though, and a number of cryptocurrency ETF applications are still pending.
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