Key Takeaways
- Hyperliquid founder Jeff Yan proposes regulating financial firms operating on blockchain infrastructure rather than the underlying network.
- Kraken’s parent company, Payward, is pursuing regulated US derivatives trading using Hyperliquid technology.
- The proposal could open blockchain-based markets to Wall Street, but US regulators have not endorsed Yan’s framework.
Hyperliquid founder Jeff Yan has proposed a regulatory framework that could allow Wall Street institutions to operate on blockchain infrastructure without requiring the underlying network to register as a traditional financial exchange.
Speaking on Bloomberg’s Odd Lots podcast on Oct. 15, Yan argued that regulatory responsibilities should fall on companies operating financial markets rather than the blockchain supporting those activities.
His proposal comes as US regulators examine how decentralized derivatives platforms could operate within existing financial rules.
“The regulation sits at the layer where there are controls, and indeed the deployers are the ones that exercise these controls,” Yan said.
Why Hyperliquid Wants a Different Regulatory Model
Hyperliquid operates a blockchain-based trading ecosystem best known for perpetual futures, derivatives contracts that allow traders to speculate on asset prices without expiration dates.
The platform currently restricts US users from accessing its perpetual futures markets.
Yan’s proposed approach separates the underlying layer-1 blockchain from businesses that build trading products on top of it.
Under this structure, financial institutions would remain responsible for customer verification, trading surveillance and regulatory reporting.
The blockchain itself would function as shared infrastructure rather than a regulated exchange operator.
“We’re not trying to displace anything,” Yan said, adding that the technology could benefit existing financial market operators.
Kraken’s Parent Company Tests the Wall Street Model
The proposal is already gaining practical relevance.
In September, Kraken parent Payward announced plans to offer US investors regulated perpetual futures using Hyperliquid’s technology.
The proposed arrangement involves Bitnomial Exchange, a Commodity Futures Trading Commission-regulated exchange, alongside Bitnomial Clearinghouse and NinjaTrader Clearing.
The products would use Hyperliquid’s HIP-3 infrastructure, which enables independent developers to launch perpetual futures markets.
However, the planned offerings remain subject to regulatory approval.
The arrangement illustrates how established financial firms could use decentralized technology while maintaining traditional compliance responsibilities.
Will US Regulators Accept Hyperliquid’s Proposal?
Yan’s comments arrive amid broader efforts to establish rules for cryptocurrency derivatives in the United States.
On Oct. 5, the CFTC released an advance notice of proposed rulemaking exploring new regulatory categories for crypto asset transactions and markets.
The proposals could reshape how leveraged cryptocurrency products are supervised, although they do not establish Yan’s preferred regulatory distinction.
The central question is whether regulators will treat public blockchain infrastructure differently from the businesses that operate markets on it.
Supporters argue that separating infrastructure from financial operators could encourage institutional adoption without eliminating investor protections.
However, determining who controls trading systems, manages risks, and bears responsibility when markets fail remains a significant challenge.
For Hyperliquid, regulatory clarity could provide a route into the US institutional market. Whether Wall Street adopts that infrastructure will depend on both regulatory approval and the ability to meet established financial safeguards
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The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Dr. Guneet Kaur is a senior editor at CCN.com and a Science Fellow at Exponential Science. She is a fintech and blockchain expert with extensive experience in digital finance education, blockchain ecosystems, and cryptocurrency markets. She has worked with global media such as Cointelegraph, as well as education and blockchain platforms, to design and lead strategic content and learning initiatives. As an educator and assessor for top-tier executive programs, she bridges real-world fintech trends with academic insight.
Dr. Kaur is also a published researcher and peer reviewer across fintech and data science journals, including Financial Innovation Journal and International Journal of Big Data Intelligence and Applications. Her work spans data-driven analysis, Web3 innovation, and technical content development. With a strong foundation in both industry and academia, she translates complex financial technologies into practical applications, empowering learners, professionals, and institutions across the rapidly evolving digital finance landscape.
