Bitwise Seeks to Bridge DeFi and Traditional Finance with HYPE ETF

Bitwise Asset Management has filed with the U.S. Securities and Exchange Commission (SEC) to launch a spot exchange-traded fund (ETF) tracking Hyperliquid’s native token, HYPE. The filing, submitted via Form S-1 under the Security Act of 1933, marks the first proposed ETF to offer direct exposure to HYPE, a token underpinning Hyperliquid’s decentralized perpetual trading protocol. The proposed fund, titled the Bitwise Hyperliquid ETF, would hold HYPE tokens in a trust structure, with Coinbase Custody Trust Company designated as custodian. In-kind creation and redemption mechanisms would link the ETF’s shares to the liquidity of HYPE, allowing investors to exchange shares for actual tokenstitle5^[5].

The SEC’s recent adoption of generic listing standards for crypto ETFs could expedite the approval process. If HYPE has traded for six months on a CFTC-regulated market, the agency may bypass individual scrutiny, potentially reducing review timelines. However, the SEC’s Form 19b-4 filing process remains mandatory, with a maximum 240-day review periodtitle5^[5]. Bitwise’s filing does not yet specify the ETF’s listing exchange, ticker symbol, or fee structure. The firm has previously navigated prolonged SEC reviews for altcoin ETFs, with deadlines for proposals like XRP, Aptos, and NEAR extended to late 2025title5^[5].

Hyperliquid, a Layer 1 blockchain focused on decentralized finance (DeFi) applications, has a market capitalization of $11 billion and a circulating supply of 270.8 million HYPE tokenstitle4^[4]. The proposed ETF aligns with Bitwise’s broader strategy to expand crypto ETF offerings, following the approval of its Bitcoin ETF (BITB) in January 2024. BITB, managed under custodian Bank of New York Mellon, holds $4.417 billion in assets under management and 74.07 million outstanding sharestitle5^[5]. Bitwise’s previous attempt to convert its BITW index fund into an ETF was delayed after initial SEC approval, underscoring the regulatory hurdles in the sectortitle5^[5].

The filing highlights a strategic shift in institutional interest toward DeFi infrastructure, with asset managers targeting the $2 trillion derivatives market. Bitwise’s move signals a broader trend of traditional finance entities seeking to integrate decentralized protocols into regulated investment vehicles. The firm’s use of the Security Act of 1933, rather than the Investment Company Act of 1940, differentiates the Hyperliquid ETF from traditional funds, classifying it as a securities offering rather than an investment company or commodity pooltitle5^[5]. This structure avoids jurisdiction under the Commodity Futures Trading Commission (CFTC), simplifying regulatory oversighttitle5^[5].

The SEC’s delayed action on competing altcoin ETFs, including Canary’s SUI and PENGU proposals, reflects ongoing regulatory caution. Bitwise’s Hyperliquid filing enters a crowded pipeline of crypto ETF applications, with the agency extending review periods for multiple proposals. The approval of Rex-Osprey’s XRP ETF in 90 days—launched on September 18—demonstrates variability in processing timelinestitle5^[5]. Analysts suggest that the success of Bitwise’s Hyperliquid ETF could set a precedent for DeFi-focused funds, bridging the gap between decentralized infrastructure and institutional adoption.

The proposed ETF’s structure and market context underscore the evolving landscape of crypto investing. By offering regulated access to HYPE, Bitwise aims to capture demand for exposure to decentralized trading protocols, a niche previously dominated by direct token purchases or over-the-counter markets. The firm’s history of navigating SEC processes, coupled with the SEC’s recent policy shifts, positions the Hyperliquid ETF as a potential catalyst for broader DeFi integration into traditional finance.