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“If there’s something that could impact that, completely outside of anyone’s oversight, I think that’s problematic,” Bland said of Hyperliquid. “To me the best way to do this is to recognize that these platforms, or the exchanges built on them, are functioning as exchanges and should have to register and meet all the same obligations any exchange would.”
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There are signs the regulator is paying attention: Michael Selig, chairman of the CFTC, said at a conference in early May that Hyperliquid could “end up influencing the spot market price or the futures market price on our registered platforms.”
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CME and the CFTC declined to comment on Hyperliquid.
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George Godsal, a spokesman for Hyperliquid’s developers, said that the platform is winning over users because it operates around-the-clock. Users can also track every trade on the blockchain, he said. “Every trade, every liquidation, and every funding payment is publicly verifiable in a way that no traditional exchange can match,” he said in a statement.
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Hyperliquid was co-founded by Jeff Yan, a former Hudson River Trading quant, and launched in 2023. Traders use crypto wallets, which allow them to operate without providing the exchange any identifying information. That contrasts with rules for US-based platforms that are required to collect details on customer identity as a safeguard against crimes like money laundering or sanctions evasion and to catch market manipulation.
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The platform offers traders the ability to bet on asset prices using perpetual futures, or “perps.” Unlike futures traded on the traditional exchanges, perps never expire, so traders don’t have to take possession of physical barrels or roll over those contracts. That makes Hyperliquid ideal for speculation, more than real-world hedging.
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The exchange has been particularly popular with small retail traders, in part because they don’t have to post thousands of dollars of collateral upfront, as is often necessary in traditional futures markets.
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While perps began as a way to speculate on digital token prices, the growth into other assets is on track to lift Hyperliquid’s revenues above $1 billion this year, according to Hyperliquid Research Collective, a research group.
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ICE and CME, for their part, collected more than $5 billion in revenue each from their exchanges and clearing businesses last year.
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Positions in oil tokens made up nearly a quarter of total Hyperliquid exchange positions as of the start of May, up from under 5% prior to the outbreak of the war, according to Artemis. Though that’s just a fraction of the open interest on CME and ICE, Hyperliquid is becoming an important source of information when the other markets are closed.
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On April 5, when President Donald Trump threatened to bomb Iran’s power plants, prices for Brent crude oil jumped as high as $111.56 on Hyperliquid, up from $109.03 a barrel, where they closed on US exchanges before the Good Friday holiday. That Monday, the traditional futures contract opened at roughly $110.
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Several traders told Bloomberg they watch weekend trading on Hyperliquid for cues on where prices may open. The crypto exchange’s predictive ability has improved, with the venue’s final pre-open price at one point coming within 4.9 basis points of the traditional open, according to Blockworks Research.
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Don Wilson, the founder of DRW, a Chicago-based high-speed trading firm with more than 2,000 employees, said in an interview that his firm transacts on Hyperliquid through employees based abroad. He said that its growth will likely force the exchanges to change their business models.
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“I think that most likely traditional exchanges will be forced to move to 24/7 or close to 24/7 just because otherwise, they’re going to lose mind share and market share,” he said.
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