Hyperliquid’s Jeff Yan Wants US Regulators to Police…

Hyperliquid founder Jeff Yan is urging US regulators to oversee financial firms that operate markets on his blockchain rather than requiring the underlying network itself to register as a regulated exchange. The proposal could provide a route for Wall Street institutions to build trading businesses on Hyperliquid while keeping regulatory responsibilities with the companies that control individual markets.Speaking to Bloomberg in an interview reported on October 15, Yan argued that financial regulation should focus on entities capable of enforcing trading restrictions, managing customers and administering markets. His comments come as Kraken's parent company, Payward, prepares to introduce US-regulated perpetual futures using Hyperliquid's technology.The proposal represents Yan's preferred interpretation of how existing financial rules should apply to decentralized infrastructure, not an announced regulatory change. Hyperliquid's existing perpetual futures platform remains unavailable to US customers.

Yan Says Market Deployers Should Carry Regulatory Obligations

Yan's central argument is that blockchain infrastructure should be distinguished from the financial businesses operating on top of it."The regulation sits at the layer where there are controls, and indeed the deployers are the ones that exercise these controls," Yan told Bloomberg.He compared Hyperliquid to internet infrastructure that regulated financial institutions can use to deliver services. Under his proposed approach, a company operating a derivatives market would remain responsible for meeting applicable regulatory requirements, while the shared blockchain would provide the underlying execution and recordkeeping infrastructure.Such a distinction could allow registered exchanges, brokers and other financial institutions to adopt Hyperliquid's technology without requiring the blockchain itself to obtain exchange registration solely because regulated markets operate on it.However, the approach would depend on regulators accepting that separation of responsibilities. Authorities would still need to determine which entities exercise sufficient control over market operations to carry legal obligations.The argument builds on an earlier policy effort. In July, the Hyperliquid Policy Center and Phantom urged the Commodity Futures Trading Commission (CFTC) to distinguish software development from regulated financial intermediation.As FinanceFeeds previously reported, the organizations argued that publishing neutral blockchain software should not automatically require registration as a derivatives exchange, clearinghouse or broker.

Kraken Parent Payward Offers a Test of the Model

Payward's planned US derivatives offering provides a concrete example of the distinction Yan wants regulators to recognize.On September 16, the Kraken parent announced plans to deploy perpetual futures markets for eligible US customers using Hyperliquid's HIP-3 framework, including an optional permissioned-market structure known as HIP-3*.Under the proposed arrangement, Payward subsidiary Bitnomial would create and administer the markets through its CFTC-regulated exchange and clearinghouse operations. NinjaTrader Clearing, another Payward business, would handle customer accounts as a registered futures commission merchant.Only customers approved through the relevant regulated entities and included on the required allowlists would be permitted to trade.Hyperliquid's blockchain would provide the underlying onchain order book and transaction infrastructure, while Payward's regulated businesses would retain responsibility for market administration, customer access and clearing.The distinction is important because Payward does not intend simply to open Hyperliquid's existing permissionless perpetual futures markets to American traders. It plans to create separate regulated markets using the same blockchain infrastructure.FinanceFeeds covered Payward's proposed Hyperliquid integration following the September announcement. The offering remains subject to regulatory approval, and Payward has not announced a launch date.Investor Takeaway: Payward's proposed structure could demonstrate how regulated derivatives markets operate on public blockchains without opening existing offshore products to US customers.

Trump's August Comments Put Hyperliquid Regulation in Focus

Yan's latest remarks follow comments from President Donald Trump in August suggesting that federal regulators were working on a pathway for Hyperliquid to operate legally in the United States.Speaking at a White House event on August 19, Trump said CFTC Chairman Michael Selig was working to bring Hyperliquid into the country in a compliant manner.The statement signaled administration interest in bringing more cryptocurrency derivatives activity under US supervision. It did not constitute approval for Hyperliquid to serve American customers or establish the regulatory structure through which such access would become possible.FinanceFeeds reported on Trump's comments and the distinction between a potential regulatory pathway and actual authorization.For regulators, the central issue extends beyond whether blockchain technology can process derivatives transactions. Market surveillance, customer identification, anti-money laundering requirements, sanctions compliance and accountability for trading activity must also be addressed.Yan's proposed framework would place those obligations with identifiable businesses administering individual markets. Whether that arrangement satisfies existing derivatives law remains a question for regulators.

What Comes Next for Hyperliquid's US Regulatory Strategy?

The most immediate milestone is regulatory clearance for Payward's proposed Hyperliquid-based perpetual futures markets. Approval would provide a practical example of a registered US derivatives operator using public blockchain infrastructure while maintaining customer and market controls.A separate development to watch is whether the CFTC provides more explicit guidance on the regulatory distinction between neutral software providers and businesses operating financial markets.Such guidance could influence how traditional exchanges, brokers and financial technology companies evaluate blockchain-based derivatives infrastructure.For Hyperliquid, the potential benefit is broader institutional adoption without necessarily changing the access rules governing its existing perpetual futures platform. But neither a commercial integration nor Yan's public argument automatically establishes that the blockchain is exempt from applicable financial regulation.Investor Takeaway: Yan is advocating a regulatory model, not announcing a legal exemption. The decisive developments will be CFTC guidance and approval of regulated markets built on Hyperliquid.Until those milestones arrive, Hyperliquid's US regulatory position remains unresolved, and its existing perpetual futures markets remain closed to American customers.