Crypto News: 21Shares Seeks Approval for 2x HYPE ETF to Double Hyperliquid Bet

21Shares files for a 2x leveraged HYPE ETF with the SEC, aiming to double exposure to Hyperliquid’s performance and DeFi growth.

21Shares has filed with the U.S. Securities and Exchange Commission (SEC) to launch a 2x leveraged HYPE ETF. This exchange-traded fund would aim to double the daily returns of the Hyperliquid Index. 

Besides, it offers a high-beta investment opportunity for those interested in the rapidly growing decentralized finance (DeFi) space. If approved, this ETF would be the first U.S.-listed leveraged fund to track Hyperliquid’s market performance.

21Shares Expands Its ETF Offerings

Eric Balchunas, an ETF analyst at Bloomberg, compared the filing to the early growth of smart beta and currency-hedged ETFs. He pointed out that the niche nature of the proposed product could make it highly attractive to certain traders. 

According to Balchunas, the HYPE ETF is a prime example of how thematic ETFs are gaining traction in today’s financial markets.

The 2x HYPE ETF would amplify exposure to Hyperliquid’s performance by 200%. This move comes as part of 21Shares’ ongoing expansion of its DeFi product offerings.

The fund would allow investors to gain more exposure to Hyperliquid’s on-chain activity, particularly in its fee and perpetual market performance.

First U.S.-Listed Leveraged ETF for Hyperliquid

If approved, the 2x HYPE ETF would become the first U.S.-listed leveraged ETF to track a live DeFi protocol. The product would integrate Hyperliquid’s perpetual futures system within a traditional daily-reset ETF structure. 

Unlike previous products, the HYPE ETF would utilize swaps instead of custody, creating new layers of exposure to funding and counterparty risk.

The initial capacity for the ETF is expected to range from $500 million to $1.5 billion, depending on liquidity conditions. This large potential capacity reflects the growing interest in DeFi-based investment products. 

Increased Interest in Hyperliquid ETFs

21Shares’ move follows similar actions by other asset managers, such as Bitwise and VanEck, who have also applied for ETFs based on Hyperliquid’s assets. 

Bitwise’s proposed HYPE ETF would hold the native token directly, offering a different approach compared to the 21Shares filing. Meanwhile, VanEck has applied for both a spot staking Hyperliquid ETF in the U.S. and a parallel European ETP.

The growing momentum for Hyperliquid-based ETFs follows recent developments on the Hyperliquid platform. The HIP-3 upgrade, which allows for permissionless perpetual market creation, has increased the platform’s utility and liquidity. 

As a result, Hyperliquid could become an even more appealing asset for ETF issuers.

This surge of interest in Hyperliquid-based products signals a shift toward decentralized finance, as asset managers recognize the value and potential growth of DeFi protocols. The success of these ETFs could pave the way for more DeFi-focused financial products in the future.

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