Bitwise Seeks SEC Approval for Spot ETF Backed by Hyperliquid’s Native Token

• Bitwise filed to launch an ETF that directly holds the HYPE token from Hyperliquid.
• The ETF must complete SEC review before it can begin trading on a public exchange.
• HYPE token price dropped as trading volume on rival platforms continued to rise.

Asset manager Bitwise has submitted a proposal for a new exchange-traded fund (ETF) tied to Hyperliquid’s native token, HYPE. The firm filed Form S-1 with the U.S. Securities and Exchange Commission on September 25. The Bitwise Hyperliquid ETF would directly hold HYPE tokens and track their market value.

The ETF aims to provide exposure to Hyperliquid without requiring users to engage with blockchain infrastructure. HYPE is used to pay network fees and access discounts on Hyperliquid’s decentralized exchange.

The filing did not disclose the trading platform, ticker symbol, or management fees for the ETF. However, Bitwise intends to allow in-kind creation and redemptions. This would let shares be exchanged for tokens instead of cash, reducing operational costs.

SEC Approval Process Still Pending

To move forward, Bitwise must file Form 19b-4 with the SEC. This step initiates the formal review required for the ETF to list. The approval process can take up to 240 days.

Earlier this month, the SEC approved generic standards for spot crypto ETFs to speed up listings. These standards allow faster approvals if an asset has active futures on a CFTC-regulated exchange for six months. Bitwise confirmed that HYPE does not meet this condition. There are currently no Hyperliquid futures contracts registered with the Commodity Futures Trading Commission.

Because of this, Bitwise’s ETF may not benefit from the shortened review period. It will still undergo the full SEC evaluation timeline.

DEX Market Sees Growing Competition

The ETF filing follows rising competition in the decentralized perpetuals market. Aster, a rival decentralized exchange, recently launched its own token. This token quickly gained traction, surpassing Hyperliquid in trading volume and open interest.

On September 26, Aster’s daily trading volume crossed $35.8 billion, according to DeFiLlama. This figure was more than triple Hyperliquid’s $10 billion on the same day. Open interest on Aster’s token rose to $1.15 billion, while HYPE’s stood at $2.2 billion.

The competitive pressure has increased as newer protocols attract more users and liquidity.

HYPE Token Faces Market Struggles

Despite the ETF filing, HYPE’s price has struggled. Over the past week, it dropped by more than 25%. As of Thursday, it traded at $42.41, recovering slightly from earlier lows.

The token has been in a downtrend since reaching $59.30 on September 18. Profit-taking, competition, and fear of token unlocks have been putting a strain on the price. Market response to the ETF filing remained muted, reflecting broader uncertainty in the sector.