Hyperliquid founder wants U.S. oversight of trading platforms, not his blockchain
Hyperliquid founder Yan is advocating for a regulatory framework where oversight is applied to the entities operating trading platforms on the blockchain rather than the underlying blockchain protocol itself. This approach aims to allow traditional financial firms to utilize Hyperliquid's technology for regulated derivatives trading without requiring the decentralized infrastructure to register as an exchange.
Why it matters
This proposal represents a potential blueprint for integrating decentralized finance (DeFi) technology with traditional U.S. financial regulations, potentially bridging the gap between institutional compliance and blockchain innovation.
Companies operating trading markets on Hyperliquid should be responsible for meeting regulatory requirements, much like financial firms using internet infrastructure, Yan said Thursday in a Bloomberg interview.
“The regulation sits at the layer where there are controls, and indeed the deployers are the ones that exercise these controls,” Yan said.
Hyperliquid, best known for its eponymous perpetual futures trading platform, remains closed to U.S. customers.
However, Kraken’s parent company, Payward, plans to offer investors in the country derivatives using Hyperliquid’s technology through a regulated exchange. For Hyperliquid, this means it could add a Commodity Futures Trading Commission (CFTC) regulated operator even though its perps market remains unavailable to U.S. customers.
Yan’s proposal would allow Wall Street firms to build trading businesses on Hyperliquid without requiring the blockchain itself to operate as a regulated exchange.
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