2 legacy exchanges push US regulators to rein in crypto platform Hyperliquid

Two of the world’s largest exchange operators, CME Group Inc. and Intercontinental Exchange Inc., are pressing US regulators to scrutinize the fast-growing crypto platform Hyperliquid. The legacy exchanges have warned the Commodity Futures Trading Commission (CFTC) that the platform’s anonymous nature could distort global commodity benchmarks, particularly in oil markets, according to a May 15 Bloomberg report.

The operators of the NYSE and the world’s biggest energy exchanges have told the CFTC and officials on Capitol Hill that Hyperliquid presents risks of market manipulation and could be used by state actors to circumvent sanctions. “Intercontinental Exchange Inc. and CME Group Inc. are pressing the US to rein in Hyperliquid, a fast-growing and unregulated crypto platform the exchanges say could skew global oil prices,” the Bloomberg report stated, citing people familiar with the discussions. The exchanges are pushing for Hyperliquid to register with the CFTC, which would require implementing customer identity checks and trade monitoring systems.

At the core of the concerns are Hyperliquid’s structural vulnerabilities. While marketed as a decentralized exchange, critics point to significant centralization risks, including a network of just 31 validators and a deposit bridge secured by a 3-of-4 multisig wallet. This design means that just three out of four keyholders could control user funds, a significant chokepoint for a platform handling billions in trading activity.

This regulatory pressure creates a critical test for the DeFi sector, pitting established, heavily regulated exchanges against protocols that operate in a legal gray area. The outcome could establish a precedent for how US regulators approach decentralized derivatives platforms, potentially forcing major operational changes and imposing significant compliance costs on Hyperliquid and its peers.

Coinbase Deal and ETF Launches Signal Growing Integration

The push for regulation comes as Hyperliquid deepens its ties with the US financial system. Coinbase Global Inc. recently became the main treasury deployer for the USDC stablecoin on the platform. The move was seen by some analysts as a strategic step to navigate the US regulatory landscape. Investor Ansem noted the deal is "extremely bullish for Hyperliquid," providing not only a revenue stream but also access to Coinbase's regulatory and distribution expertise.

Further anchoring the platform to regulated markets, two spot Hyperliquid exchange-traded funds have launched. The 21Shares HYPE ETF and the recently launched Bitwise Hyperliquid ETF (BHYP) have already attracted nearly $8.2 million in net inflows, according to SoSoValue data. This growing presence in the US market via ETFs and stablecoin partnerships makes the platform a more visible target for regulators.

On-Chain Order Book Model Faces Scrutiny

Unlike many decentralized exchanges that rely on automated market makers, Hyperliquid uses a fully on-chain order book for its spot and perpetual futures trading. The platform, built by a team with roots at MIT and Harvard, aims to offer high-speed trading with up to 200,000 transactions per second via its HyperCore engine.

However, the core complaint from CME and ICE is that this technology operates outside the established regulatory framework that governs traditional commodity markets. Their lobbying efforts suggest they view Hyperliquid not as a fringe DeFi experiment, but as a direct, unregulated competitor that could impact the integrity of the markets they dominate.

This article is for informational purposes only and does not constitute investment advice.