Hyperliquid’s Founder Proposed a Model for Regulating the Platform in the US

• Jeff Yan believes regulatory requirements should apply to the companies that operate markets on Hyperliquid, not the blockchain itself.
• The project founder wants traditional financial institutions to use his technology, rather than trying to push them out of the market.

Hyperliquid founder Jeff Yan has proposed a regulatory approach under which compliance responsibility would fall on the companies operating trading venues on the blockchain, rather than on the network itself. He said this in an interview with Bloomberg.

In Yan’s view, this model would allow Hyperliquid to grow and work with traditional financial institutions without having to take on the full set of regulatory obligations that apply to conventional exchanges.

The founder compared the proposed regulatory model to internet infrastructure, which enables financial services to operate but is not itself subject to the same oversight. He cited Amazon Web Services as an example, noting that it provides computing resources to companies without replacing their core products.

“Regulation sits at the level where the levers of control are, and it’s the ones who deploy [services] who exercise that control,” Yan said.

According to him, Hyperliquid aims to become an infrastructure layer for trading and liquidity, on top of which major financial institutions will be able to build their own products.

At the same time, the platform remains unavailable to US customers. However, Payward, the parent company of crypto exchange Kraken, has announced plans to offer US investors derivatives based on Hyperliquid’s technology via a regulated exchange, Bloomberg noted.

Yan acknowledged that US regulators are acting cautiously because they have to take into account the existing financial system and the mechanisms that protect its participants. At the same time, he believes authorities are ready to respond quickly to the emergence of new technologies.

“Regulators want to embrace innovation, but that comes with very high responsibility, because there is a system that generally works well, serves many people, and has built-in safeguards,” he noted.

In addition, Yan argued against calling traditional financial institutions outdated. In his view, they will be able to use Hyperliquid to create their own products, rather than competing with the platform as a direct replacement.

He also confirmed Hyperliquid’s ambition to become “a home for all finance.” According to Yan, a permissionless, independent model for deploying the technology could help the financial system serve people around the world better.

As a reminder, Bloomberg previously reported that Hyperliquid plans to enter the U.S. market through Kraken’s parent company.

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