Bitwise Files HYPE ETF: A Regulated Gateway for DeFi into Mainstream Portfolios

Bitwise Asset Management has filed an S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) to launch the Bitwise Hyperliquid ETF, a spot exchange-traded fund designed to provide investors with direct exposure to Hyperliquid’s native token, HYPEThe Block^[1]. The fund, structured as a Delaware statutory trust, will hold HYPE tokens directly and reflect their value through a daily net asset value (NAV) benchmarkBlockNews^[2]. This filing marks the first ETF proposal targeting exposure to HYPE, which is used to pay fees on Hyperliquid’s decentralized exchange (DEX) and offers discounts on its blockchain-based perpetual futures trading platformCryptoBriefing^[3].

The proposed ETF will mirror the structure of existing spot Bitcoin and Ether ETFs, with shares created and redeemed in large blocks by authorized participantsBlockNews^[2]. It will be physically backed by HYPE tokens, custodied by Coinbase Custody Trust Company, and will not involve derivatives, leverage, or synthetic exposureBlockNews^[2]. This approach aims to enhance transparency and regulatory compliance, appealing to traditional investors seeking access to DeFi-native assets without the complexities of self-custodyCoinTelegraph^[4].

The SEC’s delayed action on multiple altcoin ETF proposals, including Canary’s spot SUI and PENGU funds and staked INJ and SEI funds, highlights the regulatory environment’s uncertaintyThe Block^[1]. Bitwise’s filing aligns with broader industry trends as firms seek to bridge DeFi and traditional finance. The SEC recently approved generic listing standards for crypto ETFs, reducing approval timelines for assets traded on CFTC-regulated exchanges for six monthsCointelegraph^[5]. However, Bitwise noted that no Hyperliquid futures contracts are currently registered with the CFTC, complicating potential expedited approvalsCointelegraph^[5].

Market reactions to the filing were immediate. HYPE surged 4% to $42.50 following the announcement, signaling strong investor interestBlockNews^[2]. The token’s market capitalization stands at $11 billion, ranking it 21st globally, with a circulating supply of 270.8 million tokensThe Block^[1]. Analysts view the ETF as a potential catalyst for institutional adoption, legitimizing HYPE as a non-Bitcoin, non-Ethereum asset in the ETF conversationBlockNews^[2].

The filing also underscores intensifying competition among perpetual futures DEXs. Hyperliquid, long the leader in onchain futures trading, faces rising pressure from rivals like Aster, which recently surpassed it in trading volume and open interestCointelegraph^[5]. Aster’s 24-hour volume reached $35.8 billion, more than tripling Hyperliquid’s $10 billion, while its open interest hit $1.15 billion, up from $143 million in early SeptemberCointelegraph^[5]. Bitwise’s ETF could bolster Hyperliquid’s liquidity pool but must navigate a rapidly shifting market dynamicCointelegraph^[5].

The SEC’s approval process remains a critical hurdle. Bitwise must submit a Form 19b-4 to initiate the approval process, which could take up to 240 daysCointelegraph^[5]. While the filing represents a significant step, regulatory scrutiny of crypto ETFs remains stringent, with the SEC emphasizing in-kind creation and redemption mechanisms as cost-effective and efficientCointelegraph^[5].

The Bitwise Hyperliquid ETF filing reflects a broader shift in institutional recognition of DeFi infrastructure. By offering a regulated vehicle for HYPE exposure, the fund could accelerate the integration of decentralized protocols into mainstream portfolios. However, its success will depend on regulatory outcomes, market volatility, and Hyperliquid’s ability to maintain its competitive edge amid rising DEX competitionThe Block^[1]Cointelegraph^[5].