Bitwise's Pioneering HYPE ETF Navigates SEC Hurdles and DeFi Rivalry

Bitwise Asset Management has submitted a formal S-1 registration statement to the U.S. Securities and Exchange Commission (SEC) to launch a spot exchange-traded fund (ETF) directly linked to HYPE, the native token of the Hyperliquid blockchain. If approved, the fund would mark the first U.S.-listed ETF offering regulated exposure to a prominent decentralized finance (DeFi) protocol outside the well-established Bitcoin and Ethereum markets. The ETF would hold physical HYPE tokens in a custody account managed by Coinbase Custody Trust Company, enabling investors to participate in the token’s price movements through traditional brokerage accounts without direct blockchain interaction. The fund’s structure includes in-kind creation and redemption mechanisms, a method recently approved by the SEC to reduce operational costs and frictionBitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes^[1].

Hyperliquid, a Layer 1 blockchain focused on perpetual futures trading and DeFi applications, has seen fluctuating trading volumes amid growing competition from platforms like Aster. The proposed ETF aims to enhance market credibility and liquidity for HYPE by providing institutional and retail investors with a regulated vehicle. Bitwise analysts highlight Hyperliquid’s integration of features from Bitcoin, Ethereum, and Solana, positioning it as a “defining protocol” in the crypto spaceJUST IN: Bitwise Files S-1 for First-Ever HYPE ETF with SEC^[2]. However, the ETF’s approval process faces challenges due to the absence of regulated Hyperliquid futures contracts, which disqualifies it from the SEC’s expedited generic listing standards for crypto ETFs. The agency now has up to 240 days to review the application under standard proceduresBitwise Files to Launch Hyperliquid ETF with HYPE Token^[3].

The ETF’s structure includes a daily net asset value (NAV) benchmark calculated by a designated provider to reflect HYPE’s market pricing. Shares will be created or redeemed in kind, allowing authorized participants to exchange ETF shares directly for HYPE tokens. This approach, approved in July 2025, aligns with the SEC’s broader efforts to streamline crypto product approvals but remains subject to scrutiny over custody, compliance, and investor protectionsBitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes^[1]. Bitwise’s filing does not yet disclose the ETF’s listing exchange, ticker symbol, or fee structure, leaving key details pending for the 19b-4 filing required to initiate the approval processBitwise Files to Launch Hyperliquid ETF with HYPE Token^[3].

Hyperliquid’s ecosystem has seen recent developments, including the launch of its stablecoin USDH and increased treasury allocations. The HYPE treasury recently received $10 million in additional tokens, underscoring confidence in the project’s long-term potential. Despite these developments, the HYPE token has traded flat at $42.32, down 25% from its all-time high of $59.30, as investors await regulatory clarityJUST IN: Bitwise Files S-1 for First-Ever HYPE ETF with SEC^[2]. The token’s open interest has slightly declined to $2.2 billion, trailing behind Aster’s $1.16 billion surge in recent weeksBitwise Files to Launch Hyperliquid ETF with HYPE Token^[3]. Analysts suggest the ETF could catalyze broader adoption by bridging traditional finance and DeFi, though its success will depend on regulatory timelines and competitive dynamics in the perpetual futures marketBitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes^[1].

Bitwise’s foray into the HYPE ETF follows its expansion of crypto-focused products, including its flagship Bitcoin ETF BITB and applications for XRP, Aptos, and NEAR. The firm’s prior experiences with delayed approvals—such as its BITW index fund—highlight the prolonged review periods typical of SEC evaluations for crypto assets. With 11 pending applications, Bitwise’s track record underscores the regulatory hurdles facing the industry. If approved, the Hyperliquid ETF could set a precedent for mid-sized DeFi tokens, offering a regulated pathway to institutional capital and enhancing market transparency. However, the absence of a clear timeline for approval and ongoing competition in the DeFi space remain critical factors for investors to monitorBitwise Files to Launch Hyperliquid ETF with HYPE Token^[3].