A decentralized perpetuals venue called Hyperliquid is running into growing regulatory walls on both sides of the Atlantic. In the United States, the Commodity Futures Trading Commission recently approved Kalshi's BTCPERP contract and cleared a path for certain Coinbase-linked Deribit perpetuals to be treated as foreign futures — moves that effectively tighten the official perimeter around crypto derivatives. Across the ocean, the UK Financial Conduct Authority warned in May 2024 that Hyperliquid may be providing or promoting financial services without authorization. Now two of the world's largest traditional exchange operators want US regulators to take a harder look at the platform.
Why US and UK regulators have Hyperliquid in their sights
The UK FCA's May warning wasn't a formal enforcement action, but it put the market on notice. The regulator said Hyperliquid may be offering regulated financial services without the required permissions. That threat of unauthorized activity matters because UK residents can access the platform, and the FCA has been tightening its grip on crypto derivatives since a 2021 ban on retail crypto futures and options. Hyperliquid hasn't publicly confirmed whether it restricts UK users.
In the US, the CFTC's recent approval of Kalshi's BTCPERP contract — and the nod for certain Deribit perpetuals to qualify as foreign futures — signals the regulator is drawing lines around what counts as a permissible derivatives product. Those approvals don't directly name Hyperliquid, but they box in the venue's product suite. Hyperliquid's core offering is perpetual swaps, a type of futures contract that currently exists in a regulatory gray zone when offered by decentralized platforms without a clearinghouse or licensed intermediary.
How CME and ICE are amplifying the pressure
CME Group and Intercontinental Exchange — the operators of the Chicago Mercantile Exchange and the New York Stock Exchange parent, respectively — have urged US regulators to scrutinize Hyperliquid over two specific risks: market manipulation and sanctions evasion. The exchanges didn't file a public complaint, but their quiet lobbying adds weight to calls for enforcement. Both CME and ICE run their own regulated futures markets for bitcoin and ether, and they have a direct interest in ensuring that unlicensed competitors don't undercut their compliance obligations.
Market manipulation concerns center on the fact that Hyperliquid uses a decentralized order-book model with no central authority to halt trading or flag suspicious activity. Sanctions evasion worries stem from the platform's permissionless access — anyone with an internet connection and a crypto wallet can trade, including users in jurisdictions that the US Treasury's Office of Foreign Assets Control has blacklisted. CME and ICE argue that the lack of know-your-customer checks on Hyperliquid creates a pipeline for illicit flows that could undermine the integrity of the broader derivatives market.
The five strategic paths forward
Derek Edwards, managing partner at Collab+Currency, has outlined five potential strategic paths for Hyperliquid to navigate the US regulatory pressure. The list isn't public in detail, but according to Edwards it includes options ranging from seeking a CFTC registration as a designated contract market to restructuring the protocol so that trading occurs entirely offshore with strong geofencing of US users. Other paths involve partnering with a regulated broker-dealer, running a limited pilot under a no-action letter, or converting the token model to avoid classification as a commodity pool.
None of these options are quick or cheap. Registering as a DCM would require Hyperliquid to build compliance infrastructure that currently doesn't exist in its decentralized architecture. Geofencing US users would mean introducing server-side controls that many crypto-native traders see as antithetical to the whole point of decentralized finance. A partnership with a regulated intermediary would likely force Hyperliquid to cede some control over its matching engine.
Hyperliquid has not publicly commented on the regulatory pressure or on any of Edwards's proposed paths. The question now is whether the platform will engage with regulators before one of them — the FCA, the CFTC, or even the SEC — takes unilateral action. Given CME and ICE's quiet push for scrutiny, the window for voluntary compliance may be closing faster than the market expects.
