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On Wednesday, 21Shares, the world’s largest issuer of cryptocurrency exchange-traded products (ETPs), submitted a regulatory filing with the US Securities and Exchange Commission (SEC), seeking approval to launch a passive Hyperliquid ETF designed to track the price of the HYPE token.
21Shares’ Passive Hyperliquid ETF
Passive exchange-traded funds, like the one proposed by 21Shares, are structured to track the performance of a specific index or asset by holding it in consistent proportions, rather than actively selecting and managing investments.
This passive management approach typically results in lower expense ratios and reduced management fees, as there is no need for a highly compensated portfolio manager to make frequent trading decisions.
Additionally, passive ETFs usually disclose their holdings on a daily basis, offering investors clear insight into the fund’s assets. They are also known for their tax efficiency, as lower portfolio turnover generally leads to fewer capital gains taxes.
In its Hyperliquid ETF filing, 21Shares announced that it has selected Coinbase (COIN) and BitGo as custodians for the Hyperliquid ETF. The Trust will hold the HYPE token and assess its value daily based on a specified Pricing Benchmark.
Furthermore, 21Shares disclosed that it may explore alternative methods for engaging in staking activities, specifically through liquid staking protocols (LSPs). These protocols allow for the issuance of a freely tradeable digital token, known as a “Liquid Staking Token,” which represents the HYPE staked with the protocol.
The Youngest Crypto Asset To Seek ETF Approval
Notably, the HYPE token is the youngest cryptocurrency asset to have an ETF application submitted to date, underscoring the growing interest from money managers and institutions in gaining exposure to these digital assets.
Additionally, HYPE has been among the top performers since its launch back in November 2024, with a major 1,140% surge since its market debut, with a market cap nearing the $13 billion market capitalization.
The US Securities and Exchange Commission (SEC) has received a wave of ETF filings related to cryptocurrencies such as Solana (SOL), XRP, and Dogecoin (DOGE) as the demand continues to rise throughout the year. However, it is important to note that the approval process for these numerous crypto ETF applications remains pending.
The SEC is currently operating with limited staff due to a government shutdown, which has slowed down the review process. In September, the agency did remove the last significant barrier for several new spot ETFs linked to various cryptocurrencies, paving the way for potential future approvals.
Despite the Hyperliquid ETF application, the HYPE token has failed to react positively to the news with a 2% drop toward $46 in the 24-hour time frame. This puts the token 20% below its record peak of $59 reached earlier this year.
Featured image from DALL-E, chart from TradingView.com
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