A new frontier is opening up in crypto ETFs, as investment products expand into the native tokens of DeFi infrastructure protocols.
Grayscale is the latest digital asset manager to seek regulatory approval to track HYPE, the native token of Hyperliquid, which runs a decentralized exchange (DEX) using a high-performance Layer 1 blockchain optimized for perpetual futures trading.
The Grayscale HYPE ETF aims to list on the tech-focused Nasdaq exchange under the ticker GHYP. Buying the ETF would not be a direct investment in HYPE, the shares are designed to provide a "cost-effective and convenient" alternative to acquiring the token itself, Grayscale explained in a regulatory filing with the SEC. A substantial direct investment in HYPE may require "expensive and sometimes complicated arrangements in connection with the acquisition, security and safekeeping of the HYPE" as well as cash fees to third parties, it noted.
Managers have focused on tracking Bitcoin and other more established crypto assets since spot ETFs exploded on the scene in January 2024. Most ETFs to date have focused on store-of-value or general-purpose smart contract platforms such as Ether, or on Layer 1 blockchain tokens like Solana and Ripple. The HYPE ETF breaks from the norm, as it targets the token used to power the Hyperliquid DEX and its underlying Layer 1 blockchain.
Hyperliquid launched its mainnet in 2023, and reports total trading volume of $4.17tn, according to its website. If approved, HYPE would be one of the youngest assets Grayscale has attempted to wrap in an ETF in the shift towards more DeFi-native infrastructure tokens.
The token itself soared 14% on the day the US began its missile assault on Iran, while investors sold the broader crypto market. With billions of dollars worth of trades each day, the price of HYPE climbed almost 50% since 28 Feb before slipping in recent days along with other tokens.
Grayscale's 20 Mar SEC filing follows similar proposed filings by Bitwise and 21Shares in September and October 2025 respectively. 21Shares already has a jump on its rivals, announcing in late August that it had launched the 21Shares Hyperliquid ETP (HYPE) on the SIX Swiss Exchange, providing investors with institutional-grade exposure to Hyperliquid.
Bitwise had said in its SEC filing that a secondary investment objective is to seek to derive additional Hyperliquid through staking. 21Shares also expressed an interest in staking a portion of the HYPE ETF, subject to legal, regulatory and tax conditions.
Grayscale noted that staking is currently not permitted for its proposed product. However, it may make additional disclosures to the SEC in future if it intends to go down that route.
Grayscale said in January it had distributed staking rewards to shareholders of its Ethereum Staking ETF (ETHE) for the first time, marking a landmark moment for US crypto exchange-traded investment products. The distribution made ETHE the first spot crypto ETP in the US to pass staking income directly through to investors, effectively introducing yield into the ETF wrapper at a time when demand for crypto exposure is rapidly accelerating.
Grayscale manages more than 40 products and provides exposure to over 45 different digital tokens. It reported $35 billion of assets under management across its entire platform at the end of September.
Its latest filing included plenty of cautionary advice about the risks of entering the crypto market, noting the "extreme volatility" of digital assets including HYPE.
"Recent developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity," Grayscale wrote. "The largely unregulated nature and lack of transparency surrounding the operations of Digital Asset Trading Platforms may adversely affect the value of digital assets."
Still, a thirst for 24/7 trading of contracts related to conventional assets including oil and equities amid the recent war-fuelled volatility has made Hyperliquid an increasingly popular venue, creating a mesh of pros and cons around risk for future ETF owners.
