<p>The modular multilevel converter (MMC) has gained popularity for high and medium voltage applications due to its modular structure and scalability. However, the traditional half-bridge (HB) cell cannot block fault currents during an HVDC bipolar terminal fault because it can only generate positive and zero-voltage levels. This study proposes a hybrid modular multilevel converter (HMMC) that combines cross-connected (CC) cell and HB cells in a 1:2 ratio, effectively preventing fault currents during an HVDC bipolar terminal fault. Monitoring the capacitor voltage of each cell typically requires voltage sensors, adding complexity to the MMC controller in achieving the desired operation. To address this issue, a method is proposed for naturally balancing the capacitor voltages without using voltage sensors. This method utilizes a unipolar triangular carrier and a step waveform, where the magnitude of the step waveform decreases with in each fundamental frequency period, altering the position of the carriers. Furthermore, to mitigate additional component heating caused by circulating currents between phases, the arm currents are monitored using current sensors. Circulating currents between phases are controlled using three reference frames: double-frequency negative, positive, and zero sequence reference frames. Results from grid-connected HMMC simulations and hardware platforms confirm the effectiveness of the natural voltage balancing technique.</p>