In a notable stride within the realm of digital asset management, 21Shares has initiated steps to introduce an exchange-traded fund (ETF) that tracks the token of Hyperliquid, a decentralized exchange, as documented in a recent filing with the U.S. Securities and Exchange Commission (SEC).
This proposed 21Shares Hyperliquid ETF could potentially mark the launch of the second ETF centered on HYPE, Hyperliquid’s native coin, on U.S. stock exchanges. This follows a similar proposal put forth by Bitwise in September. The ETF from 21Shares plans to leverage the robust infrastructure of Coinbase, lauded as America’s foremost crypto exchange by trading volume, along with the digital asset trust services offered by BitGo, to secure its holdings.
This development arrives amidst a broader contemplation by the SEC, which is currently reviewing upwards of 90 applications for ETFs with a focus on cryptocurrencies. These span a variety of altcoins, including the likes of Solana, Cardano, XRP, and Dogecoin, along with an assortment of token combinations and investment strategies.
Hyperliquid presents itself as a decentralized exchange specializing in perpetual futures trading, granting wide access for trading in digital coins and tokens. The ETF envisaged by 21Shares aims to afford investors an avenue to gain exposure to Hyperliquid’s native token, HYPE. Classified as the 16th largest digital coin by market capitalization, HYPE boasts a valuation of $12.7 billion, as per analytics from CoinGlass.
Recently, HYPE was observed trading at $47.55, registering a 2.7% uptick over the preceding 24 hours and an impressive surge of more than 32% over the last week, according to data from CoinGecko.
The filing underscores a significant observation concerning digital assets: “HYPE is a digital asset. Like all digital assets, buying, holding and selling HYPE is very different from buying, holding and selling more traditional investments like stocks and bonds.”
The enthusiastic push by asset managers to cater to the burgeoning demand for cryptocurrency-focused products has been catalyzed by a more accommodating political and regulatory backdrop for digital assets. This enthusiasm has been further fueled by the notable success witnessed by Bitcoin and Ethereum-focused funds, which were greenlit last year.
Bitcoin-focused funds, in particular, have witnessed an unprecedented level of success in the 32-year history of the ETF industry, now managing assets exceeding $155 billion, as per CoinGlass. Ethereum-focused funds, though approved later, have already amassed control over an impressive $23.4 billion in assets, with the majority of these gains recorded in the recent four months.
The burgeoning interest in these funds reflects a growing trend among traditional investors and some institutional entities towards accessing cryptocurrencies through stock exchange-traded shares. This inclination stems from the complexities and security concerns associated with direct holdings of digital assets, alongside apprehensions related to tax implications on gains, thereby highlighting a significant pivot towards mainstream acceptance and investment in digital currencies.