Hyperliquid Eyes US Market Expansion Through HIP-3 Regulatory Framework

Jeff Yan, the co-founder of the decentralized exchange Hyperliquid, recently held meetings with policymakers in Washington to discuss the platform's strategic entry into the United States market. According to reports from Bloomberg, the expansion strategy centers on the HIP-3 partner framework, which shifts the burden of regulatory compliance, including Know Your Customer (KYC) protocols, from the core protocol to authorized partners. This approach aims to align decentralized finance (DeFi) trading with US financial oversight standards.

Regulatory Strategy and Partner Integration

The proposed market entry hinges on a structural distinction between the Hyperliquid protocol and the entities providing access to it. Jeff Yan emphasized that compliance with market regulations and identity verification should be managed by HIP-3 partners rather than the Hyperliquid foundation itself. To facilitate this, Hyperliquid began testing a revamped HIP-3 framework in September 2024, which specifically supports integrated identity verification systems.

Key industry players have already signaled their intent to utilize this infrastructure:

• Payward (the parent company of the Kraken exchange) announced plans to offer Hyperliquid perpetual contracts to US-based users via the new framework.
• Trade.xyz, which received investment from ICE (Intercontinental Exchange), intends to introduce perpetual contracts to the domestic market following formal regulatory approval.
• The framework allows for intermediary layers to handle jurisdictional legal requirements while utilizing the underlying blockchain liquidity.

Financial Performance and Institutional Interest

The move toward the US comes as Hyperliquid reports significant growth in its operational metrics. Over the past 12 months, the platform generated revenue of $713 million, highlighting the scale of the ecosystem as it seeks to bridge the gap between decentralized protocols and regulated finance. By collaborating with established financial entities like ICE and Kraken, Hyperliquid aims to establish a legitimate pathway for perpetual contract trading, a segment that has historically faced stringent restrictions from the Commodity Futures Trading Commission (CFTC) in the United States.

Entry into the US market should be accepted by HIP-3 partners through US KYC and market regulation, rather than by Hyperliquid itself.

The development of the HIP-3 framework represents a potential shift in how DeFi protocols interact with national regulators. By delegating the compliance layer to regulated partners, Hyperliquid seeks to preserve its technological architecture while satisfying the legal demands of the American financial system. The success of this initiative will likely depend on the upcoming regulatory assessments of the partners involved and the effectiveness of the identity verification tests initiated earlier this year.