Hashi has launched a testnet on Sui aimed at bringing Bitcoin collateral into decentralized finance under a custody model designed for financial institutions. The network gives developers, custodians and asset managers a place to test applications using BTC before Hashi’s planned mainnet release, with its new Guardian Layer requiring approval from two separate systems before collateral can be released.
The launch targets a large gap between Bitcoin’s market value and its use in onchain finance. Hashi’s launch materials place Bitcoin’s market capitalization at roughly $1.31 trillion, while about $4.3 billion of BTC is deployed in DeFi, equal to 0.33% of the supply by value. That leaves the overwhelming majority of Bitcoin held outside lending, trading and tokenized-product protocols.
Hashi is seeking to make that collateral more usable without asking institutions to rely on a conventional single custodian or a standard wrapped-Bitcoin structure. Its approach combines Sui’s validator network with a separate group of guardians, adding another approval requirement for withdrawals.
Guardian Layer adds a second approval system
Hashi’s custody design begins with a threshold-signature arrangement involving Sui validators. Under that setup, moving funds requires approval from at least one-third of validators. The newly introduced Guardian Layer sits on top of that process rather than replacing it.
For BTC collateral to be released, Hashi requires 2/2 authorization: a multiparty computation, or MPC, signature from Hashi validator nodes and a separate signature from a Guardian. MPC distributes cryptographic signing authority among several parties, so no individual participant holds the complete key needed to move assets.
The dual-signature structure is intended to limit the damage that could result if one group of participants is compromised or behaves improperly. A validator-side approval on its own would not be enough to release BTC, while a Guardian could not independently authorize a transfer either. For custodians and financial firms assessing Bitcoin-backed lending or tokenized fixed-income products, the arrangement places an additional control between deposited collateral and a withdrawal.
That emphasis on custody reflects a practical hurdle in institutional Bitcoin DeFi. Firms can be reluctant to put BTC into smart-contract systems where security depends on a narrow set of signers, a bridge operator, or a single technical failure point. Hashi’s testnet will show whether its two-layer process can operate smoothly enough for applications that need both stronger controls and reliable settlement.
Wave Digital plans Bitcoin yield-product tokenization
Wave Digital Assets LLC is among the first firms participating in the testnet. The company is registered with the U.S. Securities and Exchange Commission as an investment adviser and has committed to prioritize tokenizing Bitcoin yield-bearing bond products on Sui through Hashi within three years, according to the launch materials.
The plan points toward an application beyond simple BTC borrowing and lending. Tokenized bond products structured around Bitcoin yield could give professional traders a way to gain exposure to income-generating strategies while keeping Bitcoin as the underlying collateral. The eventual structure, yield source, product terms and regulatory treatment have not been detailed in the testnet announcement.
Wave Digital’s involvement also gives Hashi a prospective user with a conventional financial-services footprint, rather than limiting the testnet to crypto-native protocol teams. Whether that translates into a live product will depend on the mainnet’s technical performance, custody arrangements and product-specific compliance work.
More than 25 firms join the testing coalition
Hashi said its testnet coalition includes more than 25 partners across custody, wallet infrastructure, lending, trading, liquidity, insurance, indexing, oracle services and security auditing.
Named participants include custodians and infrastructure providers BitGo, Blockdaemon, Cobo, Fordefi, Cubist and Ledger. Fordefi is owned by Paxos. Trading and liquidity firms listed in the launch materials include Cumberland, Erebor and FalconX, while lending and DeFi participants include AlphaLend, Bluefin, Current, Scallop, Suilend, Fluid, Navi and Concrete by Blueprint Finance.
Other participants include SwissBorg, Inveniam Capital, CF Benchmarks, Soter Insure, Asymptotic, Certora and OtterSec.
The mix of firms suggests Hashi is testing an ecosystem rather than a standalone Bitcoin bridge. Custody providers would need to support deposits and withdrawal policies, wallets would need to display and handle the system’s receipt tokens, and lending venues would need to define collateral parameters. Auditors and formal-verification specialists such as Certora and OtterSec could help examine the code and security assumptions before assets are introduced on mainnet.
A large partner roster does not by itself establish production readiness. Testnets often reveal operational issues that are difficult to model in documentation, including delays between signers, transaction failures, integrations that interpret token states differently, and procedures for dealing with abnormal withdrawal requests.
hBTC is structured as a receipt claim
Users who lock Bitcoin through Hashi receive hBTC, a receipt token representing a claim on the underlying BTC. Hashi has published an SDK, integration guides and technical documentation through its pages on Sui, allowing developers to begin connecting applications to the test environment.
The receipt-token design is central to the project’s intended use. Applications need an onchain asset they can recognize and program around, while the Bitcoin itself remains subject to Hashi’s custody and withdrawal controls. hBTC would therefore serve as the representation used in Sui-based protocols rather than requiring the underlying Bitcoin blockchain to execute those applications directly.
Fenwick, a law firm that prepared a legal analysis cited by Hashi, concluded that locking BTC in Hashi and receiving hBTC should not be treated as a taxable event under U.S. federal income tax rules. The analysis describes hBTC as evidence of an ownership claim on deposited BTC rather than a separate asset received in an exchange.
That conclusion concerns the stated deposit-and-receipt arrangement and does not address every possible tax consequence from lending, selling, trading or earning yield with hBTC. Tax treatment can also depend on the facts of a particular transaction and changes in law or guidance.
Hashi’s testnet now gives its partners a chance to test the technical side of that structure: whether its independent Guardian approval can protect collateral while allowing hBTC to move through Sui applications with enough speed and predictability for institutional use.
Explore how Bitcoin powers DeFi beyond Sui—read this deep-dive on Bitcoin Layer 2 networks next.
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