21Shares Applies for Hyperliquid ETF as New Crypto Funds Hit Market

Exchange-traded fund issuer 21Shares has applied for an exchange-traded fund tracking the token of the Hyperliquid decentralized exchange, according to a U.S. Securities and Exchange Commission filing on Wednesday. 

The 21Shares Hyperliquid ETF would potentially become the second HYPE-focused ETF to trade on U.S. exchanges, following a proposal by Bitwise in September. The 21Shares product would use America’s largest crypto exchange by trading volume, Coinbase, and digital asset trust company BitGo as custodians for its holdings.

The filing comes as the Securities and Exchange Commission mulls over more than 90 applications for crypto-focused ETFs, covering a range of altcoins, including Solana, Cardano, XRP and Dogecoin, and combinations of tokens and strategies. 

Hyperliquid is a decentralized exchange—or DEX—specializing in perpetual futures trading. Anyone can use the platform to trade digital coins and tokens. The proposed fund would give investors exposure to Hyperliquid’s native token, HYPE, which is the 16th biggest digital coin with a $12.7 billion market capitalization, according to data analytics platform CoinGlass.

HYPE was recently trading at $47.55, up 2.7% over the past 24 hours and more than 32% over the past week, according to crypto data provider CoinGecko.

“HYPE is a digital asset. Like all digital assets, buying, holding and selling HYPE is very different from buying, holding and selling more conventional investments like stocks and bonds,” the filing read.

Asset managers have been eager to address strong demand for crypto-focused products, amid a friendlier political and regulatory environment for digital assets, and following the dramatic success of Bitcoin and Ethereum-focused funds approved last year. 

Bitcoin funds have had the most successful start in the ETF industry’s 32-year history and now manage over $155 billion in assets, according to data analytics platform CoinGlass. Ethereum funds, approved later in the year, now control an impressive  $23.4 billion in assets, most of those gains coming in the last four months. 

The funds have given more traditional investors and some institutions access to crypto via shares that trade on a stock exchange. Previously, investors were discouraged by the complexity and security concerns raised by holding digital assets directly. They have also fretted over taxes on gains.