Hyperliquid founder Jeff Yan urges U.S. regulators to oversee the companies operating markets on its blockchain, rather than regulate the network as an exchange. He described the Layer 1 as shared financial infrastructure during an appearance on Bloomberg’s Odd Lots podcast, according to the source report.
Yan urges U.S. regulators to place compliance duties on businesses that create, deploy and control markets on the network. The proposal is his preferred approach, not an existing classification under U.S. law.
Why Yan Urges U.S. Oversight at the Operator Level
“The regulation sits at the layer where there are controls, and indeed the deployers are the ones that exercise these controls,” Yan said. Under his view, regulators would focus on the firms exercising control over financial markets instead of treating the underlying blockchain as a single exchange.
That distinction matters because one blockchain can provide infrastructure to multiple independent financial services. Each market operator could then be accountable for compliance tied to its own activities, while using the same underlying network.
The argument comes as traditional financial firms explore blockchain-based market infrastructure. BlockTelegraph has also reported on financial institutions moving operations onto blockchain networks, and on Blockchain.com seeking CFTC registrations for derivatives and prediction markets. Those are separate developments, but both concern how regulated financial activity may operate alongside blockchain technology.
Hyperliquid Technology and U.S. Derivatives
Yan’s comments arrive as Kraken parent Payward reportedly plans to offer derivatives to U.S. investors using Hyperliquid technology through a regulated exchange, according to Bloomberg. The arrangement would place a Commodity Futures Trading Commission-regulated operator on the network, while Hyperliquid’s own perpetual futures platform remains closed to U.S. customers.
Yan said Hyperliquid is not trying to displace traditional financial institutions. “We’re not trying to displace anything,” he said, adding that he believes the technology can benefit firms that already operate markets in a traditional setting.
The source describes Payward’s plan as a reported intention, not a completed launch. It does not say when the offering may begin or specify its terms.
BlockTelegraph has covered other institutional blockchain projects, including LG CNS’s platform for financial institutions. That project is distinct from Hyperliquid, but also involves blockchain infrastructure designed for institutional use.
Regulatory Responsibility Remains Unsettled
The debate raises the question of who is responsible when financial services run on blockchain networks. Traditional exchanges operate under rules for trading venues and market intermediaries. Blockchain systems can separate the network infrastructure from the firms running markets, while developers, operators and users may have overlapping roles.
Yan argues that oversight should follow the entities exercising control over markets. He said that approach could let institutions use shared blockchain infrastructure while meeting rules relevant to their specific activities. U.S. regulators would still need to assess the activities and legal responsibilities involved.
His remarks follow President Donald Trump’s August statement that the CFTC was working to bring Hyperliquid under federal oversight. The source does not provide a year for that statement. It also does not say that regulators have adopted Yan’s proposed framework.
For now, Yan’s position is that Hyperliquid can host regulated operators without the blockchain itself being registered as an exchange. The next step rests with regulators assessing the specific businesses and activities using the network.