Summary
- The Financial Conduct Authority in the UK has identified Hyperliquid and Hyper Foundation as unauthorized entities.
- CME Group's CEO cautioned that crypto perpetuals could be a “disaster waiting to happen.”
- Regulators are examining the resilience of perpetual markets to sudden changes, according to Decrypt.
Hyperliquid is back in the spotlight as one of the leading platforms for crypto perpetual futures, following a warning from the UK's financial regulator in May that labeled both Hyperliquid and Hyper Foundation as unauthorized amid growing concerns over crypto perpetuals.
This advisory originated from the UK's Financial Conduct Authority, which stated in a notice issued on May 21 that Hyperliquid, the Hyper Foundation, its application, and associated social media might be offering or promoting financial services within the UK without the necessary permissions.
The notice had received little attention until recently, when it started appearing more frequently in search results examined by Decrypt.
The regulator warned that Hyperliquid “may be providing or promoting financial services or products” without proper authorization, advising users to “avoid engaging” with the platform.
This week, CME Group CEO Terry Duffy expressed concerns that crypto perpetuals could represent a "disaster waiting to happen," as U.S. regulators begin to permit similar products into regulated marketplaces, as reported by Reuters.
Duffy criticized the CFTC’s approval process for what he described as a "novel and complex" product, suggesting that the market has been overtaken by speculation.
On the following Wednesday, Intercontinental Exchange CEO Jeffrey Sprecher indicated that the parent company of NYSE was evaluating Hyperliquid’s model and questioning regulators on why traditional exchanges could not offer similar products.
Just two days later, the CFTC approved the prediction market platform Kalshi to launch Bitcoin perpetual futures.
Increased Visibility
Hyperliquid stands as one of the most significant decentralized platforms for crypto perpetual futures, which are derivatives allowing traders to speculate on token prices with leverage and no expiration.
Unlike conventional futures traded on regulated markets like CME, perpetual contracts can remain open indefinitely, with regular funding payments to align prices closely with spot markets.
The magnitude of Hyperliquid’s operations has made it increasingly difficult to overlook. As of May 20, the platform had reportedly generated $255 million in revenue for the year, while its HYPE token had increased by 101% during the same timeframe.
“Crypto perpetuals have evolved into a primary method for expressing directional views on digital assets,” stated Matthew Pinnock, COO of Altura DeFi, in an interview with Decrypt. He noted that the volume handled by platforms like Hyperliquid has rendered them “impossible” for traditional market players to dismiss as marginal.
Growing institutional interest alongside U.S. approvals for certain perpetual products has raised questions about how these instruments fit into regulated markets, Pinnock added.
Regulators are now monitoring the “increasing role [that] perpetual futures play in price discovery,” Pinnock remarked, highlighting that platforms like Hyperliquid enable traders to express opinions on assets “often ahead of traditional markets offering similar access.”
The FCA’s warning regarding Hyperliquid indicates that regulators are pursuing different strategies within the same market, as the UK flags an offshore platform while the U.S. begins to allow some products under regulatory supervision, he noted.
Looking ahead, Pinnock emphasized that the critical test will be whether liquidation systems, margin regulations, and market oversight can withstand "sudden shifts in conditions."