Bitwise Files HYPE ETF: A Compliant Entry Point Bringing DeFi to Traditional Investment Portfolios

Bitwise Asset Management has submitted an S-1 registration to the U.S. Securities and Exchange Commission (SEC) to introduce the Bitwise Hyperliquid ETF, a spot exchange-traded fund aimed at giving investors direct access to Hyperliquid’s native token, HYPE The Block [ 1 ]. Structured as a Delaware statutory trust, the ETF will directly hold HYPE tokens and track their value using a daily net asset value (NAV) calculation BlockNews [ 2 ]. This marks the first ETF application focused on HYPE, which is used for transaction fees on Hyperliquid’s decentralized exchange (DEX) and provides trading fee discounts on its blockchain-based perpetual futures platform CryptoBriefing [ 3 ].

The planned ETF will follow the model of current spot

and Ether ETFs, with shares issued and redeemed in large quantities by authorized participants BlockNews [ 2 ]. It will be physically backed by HYPE tokens, which will be held by Custody Trust Company, and will not use derivatives, leverage, or synthetic products BlockNews [ 2 ]. This structure is intended to boost transparency and regulatory alignment, making it attractive to traditional investors who want exposure to DeFi assets without managing their own custody CoinTelegraph [ 4 ].

The SEC’s slow response to several altcoin ETF applications, such as Canary’s spot SUI and PENGU funds and staked INJ and SEI products, highlights ongoing regulatory uncertainty The Block [ 1 ]. Bitwise’s move fits into a larger industry trend of bridging DeFi with conventional finance. The SEC has recently approved general listing rules for crypto ETFs, shortening the approval process for assets traded on CFTC-regulated exchanges for at least six months Cointelegraph [ 5 ]. However, Bitwise pointed out that there are currently no Hyperliquid futures contracts registered with the CFTC, which could complicate a faster approval process Cointelegraph [ 5 ].

The market responded quickly to the news. HYPE jumped 4% to $42.50 after the announcement, indicating strong investor enthusiasm BlockNews [ 2 ]. The token now has a market cap of $11 billion, placing it 21st worldwide, with 270.8 million tokens in circulation The Block [ 1 ]. Experts see the ETF as a potential driver for institutional interest, positioning HYPE as a notable alternative to Bitcoin and Ethereum in the ETF space BlockNews [ 2 ].

This filing also highlights the growing rivalry among perpetual futures DEXs. Hyperliquid, a long-standing leader in onchain futures, is now facing increased competition from platforms like Aster, which recently overtook it in both trading volume and open interest Cointelegraph [ 5 ]. Aster’s 24-hour trading volume hit $35.8 billion, more than tripling Hyperliquid’s $10 billion, and its open interest surged to $1.15 billion from $143 million in early September Cointelegraph [ 5 ]. While Bitwise’s ETF could strengthen Hyperliquid’s liquidity, it must adapt to a rapidly evolving market Cointelegraph [ 5 ].

The SEC’s review process remains a significant challenge. Bitwise will need to file a Form 19b-4 to start the approval process, which could take as long as 240 days Cointelegraph [ 5 ]. Although this filing is a major milestone, regulatory oversight of crypto ETFs is still strict, with the SEC favoring in-kind creation and redemption methods for their efficiency and cost-effectiveness Cointelegraph [ 5 ].

The Bitwise Hyperliquid ETF application signals a broader trend of institutional acceptance of DeFi infrastructure. By providing a regulated way to gain HYPE exposure, the fund could help bring decentralized protocols into mainstream investment portfolios. However, its ultimate success will depend on regulatory decisions, market fluctuations, and Hyperliquid’s ability to stay ahead in an increasingly competitive DEX landscape The Block [ 1 ] Cointelegraph [ 5 ].