In Brief:
- Sui launched the Hashi testnet July 22, letting developers and institutions test Bitcoin-collateralized lending before mainnet.
- BTC stays on the Bitcoin network while Sui smart contracts manage the collateral rights, and a new Guardian Layer adds a 2-of-2 multisig check on withdrawals.
- More than 25 partners including BitGo, FalconX and Wave Digital Assets are testing the system; law firm Fenwick concluded that Hashi deposits and redemptions should not be taxable events under U.S. law.
Sui turned on the Hashi testnet July 22, giving builders and institutions their first chance to develop and integrate Bitcoin-backed lending and credit applications ahead of mainnet.
Hashi was first introduced in March as a way to use native BTC as collateral on Sui without moving it off the Bitcoin network. The testnet is the point where more than 25 partners and new developers can start 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.
The pitch is a lending primitive. Users lock BTC as collateral and borrow credit denominated in other assets, with the Bitcoin never leaving its own chain.
How custody and execution split
The design keeps custody separate from execution. A user sends native BTC to a Hashi-generated deposit address, with each Sui address getting its own 2-of-2 multisig address on Bitcoin.
Validators watch the Bitcoin network and, once they confirm the BTC is locked, issue a collateral credential on Sui. That credential isn’t a wrapped token. It’s an on-chain proof that real BTC is locked and owned by the depositor.
From there the credential can back loans, yield strategies and other DeFi positions written into Sui smart contracts. After repayment, validators release the native BTC on Bitcoin mainnet through MPC threshold signatures, and it can be withdrawn to any Bitcoin address without manual steps.
The Guardian Layer
The testnet also brought a new security feature. Under the Guardian Layer, all BTC collateral is secured with a 2-of-2 multisig that requires an MPC signature from the Hashi validators plus a separate signature from a designated guardian.
The guardian acts as a second check before BTC leaves the system. It’s meant to slow or stop suspicious activity and guard against validator collusion, which has been a recurring worry for institutions weighing native Bitcoin in on-chain markets.
Partners and institutional plumbing
Custody and wallet providers testing Hashi include BitGo, Blockdaemon, Cobo, Fordefi, Ledger and SwissBorg. Trading and capital-markets names in the group include Cumberland, FalconX and Bullish. Over 20 partners had already committed at devnet.
Wave Digital Assets, an SEC-registered investment adviser that joined during devnet, deepened its role. It committed to a three-year best-efforts push to prioritize tokenizing Bitcoin-yield-bearing bond products on Sui using Hashi.
Tax treatment was another sticking point. Fenwick, one of the foremost law firms in digital assets, concluded that Hashi’s deposit and redemption mechanics should not constitute taxable events under U.S. tax law. Institutions had lacked confidence that moving native BTC into on-chain markets could be done without triggering tax consequences.
The idle-BTC problem
The target is a large pool of dormant capital. Bitcoin’s market cap tops $1 trillion, but only about 0.22% of it is used in DeFi, and limited collateral transparency has kept institutional money out of synthetic Bitcoin products.
Sui builds Hashi on its Move language, which enforces strict asset ownership and supports formally verified contracts. Developers can pull SDK documentation and integration guides at sui.io/hashi to validate integrations and operational workflows before mainnet.
The launch shared the day with a separate development: Coinbase turned on SUI staking.
“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.”
