In Brief:
- On July 22, Sui went live with the Hashi testnet, allowing developers and institutions to trial Bitcoin-collateralized lending ahead of the mainnet release.
- Bitcoin remains on its own network while Sui smart contracts govern the collateral rights, and a newly added Guardian Layer introduces a 2-of-2 multisig check on withdrawals.
- Over 25 partners — among them BitGo, FalconX and Wave Digital Assets — are putting the system through its paces; the law firm Fenwick determined that Hashi deposits and redemptions should not count as taxable events under U.S. law.
Sui switched on the Hashi testnet on July 22, offering builders and institutions their first opportunity to develop and integrate Bitcoin-backed lending and credit applications ahead of mainnet.
Hashi debuted back in March as a method for using native BTC as collateral on Sui without ever taking it off the Bitcoin network. With the testnet now open, more than 25 partners and additional developers can begin stress-testing those applications against live infrastructure.
In March, Hashi was first introduced: a new way to put $BTC to work on Sui without moving it off the Bitcoin network.
Today, Hashi testnet is live.@SuiView on X ↗
At its core, the offering is a lending primitive. Holders lock up BTC as collateral and take out credit denominated in other assets, all while their Bitcoin stays put on its native chain.
How custody and execution split
The architecture deliberately separates custody from execution. A user transfers native BTC to a deposit address generated by Hashi, where every Sui address is paired with its own 2-of-2 multisig address on Bitcoin.
Validators monitor the Bitcoin network, and after confirming that the BTC has been locked, they mint a collateral credential on Sui. Rather than a wrapped token, that credential serves as on-chain proof that genuine BTC is locked and belongs to the depositor.
From that point, the credential can support loans, yield strategies and other DeFi positions encoded into Sui smart contracts. Once a loan is repaid, validators unlock the native BTC on Bitcoin mainnet via MPC threshold signatures, and it can be sent to any Bitcoin address without manual intervention.
The Guardian Layer
The testnet also introduced a fresh security measure. With the Guardian Layer in place, every unit of BTC collateral is protected by a 2-of-2 multisig that requires both an MPC signature from the Hashi validators and a separate signature from a designated guardian.
That guardian functions as a second layer of approval before any BTC exits the system. Its purpose is to delay or halt suspicious activity and to defend against validator collusion — a persistent concern for institutions considering native Bitcoin in on-chain markets.
Partners and institutional plumbing
The custody and wallet providers trialing Hashi include BitGo, Blockdaemon, Cobo, Fordefi, Ledger and SwissBorg. On the trading and capital-markets side, the roster features Cumberland, FalconX and Bullish. More than 20 partners had already signed on at the devnet stage.
Wave Digital Assets, an SEC-registered investment adviser that came aboard during devnet, expanded its involvement. The firm pledged a three-year best-efforts commitment to prioritize tokenizing Bitcoin-yield-bearing bond products on Sui through Hashi.
Tax treatment posed another obstacle. Fenwick, among the leading law firms in digital assets, concluded that Hashi’s deposit and redemption processes should not amount to taxable events under U.S. tax law. Until now, institutions had been unsure whether moving native BTC into on-chain markets could be accomplished without triggering tax consequences.
The idle-BTC problem
The opportunity lies in a vast reserve of dormant capital. While Bitcoin’s market cap exceeds $1 trillion, roughly just 0.22% of it is deployed in DeFi, and thin collateral transparency has kept institutional capital away from synthetic Bitcoin products.
Sui builds Hashi on top of its Move language, which imposes strict asset ownership and accommodates formally verified contracts. Developers can access SDK documentation and integration guides at sui.io/hashi to test their integrations and operational workflows in advance of mainnet.
The rollout coincided with a separate announcement: Coinbase enabled SUI staking the same day.
“Every major asset class eventually develops deep credit, lending, and liquidity markets,” said Adeniyi Abiodun, Co-Founder and Chief Product Officer of Mysten Labs, the original contributor to Sui. “Bitcoin is no different. Hashi is giving developers the infrastructure to build those markets onchain with the security, transparency, and programmability institutions have been waiting for.”