Bitwise has filed to launch an ETF tracking the Hyperliquid (HYPE) token as trading volumes on decentralized derivatives exchanges hit an all-time high.

Bitwise prepares Hyperliquid ETF amid record DEX volume

Bitwise has filed with the SEC to create an exchange-traded fund that will directly hold the Hyperliquid (HYPE) token. It is an asset used to pay fees and receive rebates on the Hyperliquid decentralized exchange and its blockchain.

The fund, called the Bitwise Hyperliquid ETF, will offer investors “pure” access to HYPE value, similar to last year’s Bitcoin and Ethereum ETFs. It will feature in-kind redemptions: exchanging the fund’s shares directly for HYPE tokens instead of cash.

Regulatory nuances

The application is in the form of a Form S-1 under the “33 Act” and is only the first step before launching. The launch will also require approval in the 19b-4 format, which can take up to 240 days.

The SEC in July simplified the ETF approval process, allowing for common listing standards and in-kind redemptions, but in the case of Hyperliquid there is a nuance: there are currently no CFTC-registered futures for the token. This could complicate the likelihood of quick approval.

Competition with Aster

The fund’s launch comes against the backdrop of increased competition among decentralized derivatives exchanges. Aster, a new player on the BNB Chain, exploded in volume in September: $35.8 billion in a day, compared to $10 billion for Hyperliquid. Open interest in the Aster token jumped to $1.15 billion from $143 million in a few days.

In comparison, open interest for HYPE fell 1.85% to $2.2 billion, while its price fell 3.5% to $42.5. This puts additional pressure on Bitwise as it tries to consolidate Hyperliquid’s position in the market.

Related: Hyperliquid’s August revenue has set a new record, exceeding the $100 million mark