DeFi Connects with Wall Street: HYPE ETF Applies to SEC for Broader Market Entry

Bitwise Asset Management has filed an S-1 registration with the U.S. Securities and Exchange Commission (SEC) aiming to introduce a spot exchange-traded fund (ETF) based on Hyperliquid’s HYPE token, which is the native asset of the decentralized finance (DeFi) platform Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ]. If approved, this would be the first ETF to offer regulated access to a major DeFi protocol outside of

and Ethereum Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ]. The planned ETF intends to hold actual HYPE tokens in a custody account overseen by Custody Trust Company, allowing investors to gain exposure to price changes through standard brokerage accounts without needing to interact with blockchain technology directly. The ETF will track a daily net asset value (NAV) to represent market pricing Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ].

An important aspect of the HYPE ETF is its in-kind creation and redemption process, which received SEC approval in July. This feature lets authorized participants swap ETF shares directly for HYPE tokens, lowering expenses and reducing operational hurdles compared to cash-based systems Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ]. This approach is in line with the SEC’s broader push to simplify crypto ETF approvals, though the HYPE ETF does not fit within the agency’s new generic listing rules because there are no regulated Hyperliquid futures contracts Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ]. Consequently, the fund will undergo the standard 240-day review process Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ].

Hyperliquid is a Layer 1 blockchain specializing in perpetual futures trading, and its trading volume has varied as it competes with platforms such as Aster. The HYPE token functions as a utility asset, providing lower fees on the decentralized exchange and serving as the protocol’s medium of exchange Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ]. Approval of the ETF could boost the reputation of mid-tier DeFi tokens and increase funding for blockchain-based financial services. Nevertheless, the SEC’s ongoing focus on custody, regulatory compliance, and investor safety continues to be a significant challenge Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ].

The SEC’s approach to Bitwise’s other crypto ETF proposals has introduced additional unpredictability. In July, the agency unexpectedly halted the approval process for converting the Bitwise 10 Crypto Index Fund into an ETF, even after initial staff support Bitwise Crypto ETF Faces Sudden Pause After Surprise Approval … [ 2 ]. Similar postponements have impacted spot Bitcoin and Ether ETF filings, with the SEC invoking Rule 431 to extend the review for full commission consideration. This pattern is similar to the recent delay of Grayscale’s Digital Large Cap Fund, raising concerns about regulatory consistency.

Bitwise’s application for the HYPE ETF underscores the SEC’s shifting stance on crypto investment products. While the agency has set up generic listing standards to speed up approval for tokens traded on CFTC-regulated markets for at least six months, the lack of such a market for HYPE may result in a longer review Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ]. The company has also encountered setbacks in converting its BITW index fund to an ETF, highlighting the regulatory hurdles facing crypto product development Bitwise Crypto ETF Faces Sudden Pause After Surprise Approval … [ 2 ].

Approval of the HYPE ETF could represent a significant step for the integration of DeFi tokens into mainstream finance. By providing a regulated way to invest in a DeFi protocol beyond Bitcoin and Ethereum, the ETF could appeal to both institutional and individual investors seeking broader crypto exposure. However, the SEC’s careful approach and the lack of a definitive approval timeline mean the fund’s launch date remains unclear Bitwise Files S-1 with SEC for Spot HYPE ETF | BanklessTimes [ 1 ].