- 21Shares filed an S-1 with the SEC for a 2x leveraged ETF tied to Hyperliquid’s HYPE token
- The fund uses derivatives, not direct token holdings, to achieve 2x daily market exposure
- The ETF operates under the Securities Act of 1933 but outside CFTC and Investment Company Act oversight
Crypto asset manager 21Shares has submitted an S-1 registration statement to the U.S. Securities and Exchange Commission (SEC). The filing seeks approval to launch the 21Shares 2x Long HYPE ETF. This leveraged fund is designed to deliver twice the daily returns of Hyperliquid (HYPE) before fees and expenses.
Related: 21Shares Files INJ ETF as Injective Joins Elite Group With Multiple ETF Bids
How the 2x HYPE ETF Works
According to the filing, the proposed fund will use swap agreements, options, and other derivatives to mirror HYPE’s market performance. The ETF will not hold the token directly. It instead mirrors on-chain dynamics native to the Hyperliquid network, such as perpetual futures trading and fee structures.
21Shares noted that the fund will use a daily reset mechanism, similar to conventional leveraged ETFs, to maintain its 2x exposure target. This derivative-based structure aims to reduce custody risk, as it avoids direct token ownership.
Authorized Participants (APs) may create or redeem shares either in cash or in-kind. Cash transactions are handled through designated HYPE Counterparties. These are independent third parties that acquire or sell HYPE on behalf of the Trust. The filing states that 21Shares will conduct due diligence on these counterparties, reviewing their financial standing and regulatory oversight.
Creation, Redemption, and Oversight
When APs create shares in cash, the HYPE Counterparty purchases equivalent HYPE and deposits it with approved custodians. For redemptions, the process is reversed. HYPE is sold at the Pricing Benchmark rate, and cash proceeds are deposited for settlement. APs are responsible for any slippage or trading costs incurred during this process.
The ETF’s continuous offering is registered under the Securities Act of 1933 and will remain active for three years. The Trust is not registered under the Investment Company Act of 1940 and does not fall under Commodity Futures Trading Commission (CFTC) oversight.
If approved, this fund would mark the first U.S.-listed leveraged ETF linked to an active DeFi protocol. 21Shares also filed a separate S-1 for an SEI-tracking ETF on the same day, referencing CF Benchmarks as its pricing index provider.
Related: 21Shares Moves Solana ETF Closer to Cboe Listing With Staking Option
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