Trump nominates Hyperliquid to enter the US: A moment of co-opting DeFi.

Author: Deep Tide TechFlow

On August 19th, Trump made a statement at a White House crypto industry conference that sent the entire crypto market reeling: CFTC Chairman Mike Selig was working to get Hyperliquid into the U.S. market in a "fully compliant and legal" manner. The HYPE token immediately surged, rising as much as 19% to $69.60, bringing its market capitalization to $17.6 billion. The Nasdaq-listed Hyperliquid Strategies (PURR) saw its stock price rise over 30% that day.

But Trump didn't specify any concrete path. The CFTC also didn't approve Hyperliquid's operations in the US. The gap between a president's words and a compliance license may not just be time, but a fundamental question that the DeFi industry has never truly answered.

The King of Decentralized Perpetual Contracts

Hyperliquid is currently the undisputed leader in the on-chain perpetual contract market.

In 2025, it processed approximately $2.9 trillion in transactions, accounting for over 70% of the on-chain perpetual contract market share. In Q1 of 2026, the quarterly transaction volume reached $633 billion. By mid-2026, the cumulative transaction volume exceeded $4.7 trillion. The average daily transaction volume fluctuated between $3 billion and $10 billion, and the 30-day rolling transaction volume approached $190 billion.

It runs on its self-built L1 blockchain, HyperBFT, optimized for derivatives trading, with order processing speeds reaching 200,000 transactions per second and sub-second confirmation. USDC serves as the settlement asset, offering over 300 trading pairs with leverage up to 40x. In 2026, it began expanding to perpetual contracts for non-crypto assets, covering crude oil, gold, and stock indices, making it the first on-chain perpetual contract provider .

This marks another foray into the traditional territories of commodities and stock markets.

The comparison is straightforward: CME accounts for approximately 92% of the US exchange-traded derivatives market, but it closes on weekends. A trading firm needing to hedge its crude oil positions would be exposed to full gap risk from Friday afternoon to Sunday evening. Hyperliquid, offering 24/7 uninterrupted trading, directly eliminates this structural disadvantage.

But Hyperliquid's competitiveness goes beyond just transaction speed and 24/7 availability. Its core product logic is that users can manage margin, match orders, and settle accounts on-chain through a direct wallet connection protocol, without having to entrust their assets to any intermediary.

There are no brokers, no KYC, and no traditional "account opening" process. Users have complete self-custody control over their funds.

This is precisely why it is shut out of the US market, and also why it can attract traders from all over the world.

Compliance Paradox

Now, if we put Trump's statement back into Hyperliquid's product architecture, the problem immediately comes to light.

The US CFTC's regulatory framework for derivatives trading venues is designed for a world with intermediaries. It requires: Qualified Contract Markets (DCMs) to handle order matching and market monitoring; Futures Commission Merchants (FCMs) to handle client fund segregation and margin management; and Derivatives Clearing Organizations (DCOs) to handle central counterparty clearing and default processing. Each layer has clearly defined registration, reporting, and auditing obligations.

Hyperliquid's product design, however, removes all three intermediate layers.

The smart contract executes the matching process, the on-chain protocol handles the settlement, and users self-custody their funds. The entire process does not require the existence of DCM, FCM, or DCO. In a joint submission to the CFTC in July, Hyperliquid Policy Center and Phantom clearly stated that the way on-chain protocols operate is fundamentally different from traditional markets. Users keep their private keys themselves and interact directly through smart contracts. The registration requirements for custodial intermediaries in existing rules should not be automatically applied to developers of non-custodial protocols.

This is the core of the compliance paradox: For Hyperliquid to enter the US market, it must, to some extent, accept compliance requirements such as KYC verification, customer asset segregation, market monitoring, dispute resolution, and brokerage licensing. However, each of these requirements undermines its product differentiation advantage over CME and Coinbase.

What's the difference between Hyperliquid, which requires brokerage, and CME, which supports 24/7 perpetual contracts?

Three possible paths

The Hyperliquid team is clearly not new to this issue. From establishing the Hyperliquid Policy Center in February 2026, to visiting the SEC's Crypto Working Group with the law firm Sullivan & Cromwell in July, and then submitting a joint opinion with Phantom to the CFTC on July 9, they have been systematically pushing for clarification of the regulatory path.

Based on the current regulatory framework and industry dynamics, there are three feasible paths:

Path 1: Create a "US version of Hyperliquid".

While retaining the core protocol, a separate front-end will be built for US users, incorporating a KYC gateway, trading limits, and compliance monitoring modules. Similar to the relationship between Binance and Binance US, the underlying technology is shared, but the regulatory and compliance layers are completely independent. The advantage is that it retains the freedom of the original protocol in the global market; the cost is that the user experience of the US version will inevitably deteriorate: more review steps, slower listing speeds, and potentially fewer trading pairs.

Option 2: Partner with licensed exchanges or brokers, with the agreement only providing the underlying technology.

There's already a precedent for this approach. ICE CEO Jeffrey Sprecher publicly stated in May 2026 that ICE had held "exploratory discussions" with Hyperliquid. If Hyperliquid, as a technology provider, offers on-chain matching and settlement engines to regulated DCMs, it wouldn't need to register as a trading venue itself, but would instead be embedded as an infrastructure layer within the existing compliance framework. CME already launched 24/7 trading in 2026; if it were to integrate on-chain clearing, the efficiency advantage would be further narrowed. However, for Hyperliquid, this would mean transforming it from a financial platform into a SaaS provider.

Path 3: The CFTC designs a new compliance framework for on-chain perpetual contracts.

This is the direction the joint submission from the Hyperliquid Policy Center and Phantom is truly pushing forward. They raise three key demands: the development and release of on-chain protocol software should not itself trigger registration obligations; registered DCMs and FCMs should be allowed to use on-chain infrastructure to perform regulated functions; and the CFTC's previous exemption from registration for Phantom should be formalized into regulations. If the CFTC accepts this framework, it means the regulator has recognized a completely new paradigm: on-chain protocols can serve as the execution layer for regulated activities, with regulatory obligations falling on the registered entities using the protocol, rather than the protocol developers.

Following the White House meeting, Selig tweeted that he would provide more details at the inaugural meeting of the CFTC Innovation Advisory Committee on August 20. The committee includes the CEOs of Coinbase, Robinhood, Kalshi, and Polymarket, who are both potential partners and competitors of Hyperliquid.

This isn't just a Hyperliquid issue.

Zoom out.

Trump's naming of a DeFi protocol at the White House was a watershed moment. This signifies that decentralized finance has evolved from a "fringe experiment in a regulatory gray area" to a "presidential-level industry policy issue." On the same day, the SEC released its Regulation Crypto Assets framework proposal, providing an exemption pathway of up to $75 million annually for crypto asset issuance.

However, the distance between the signal and reality is often greater than what the market price indicates.

The reality is that Hyperliquid still blocks US users in its terms of service, the CFTC has not approved any operating licenses, the specific compliance path has not been announced, and the CLARITY Act is still stuck in the Senate, with the earliest it may be brought back to the Senate is September.

In the traditional financial sector, ICE and CME have begun to fight back.

In May, the two companies jointly urged regulators to review Hyperliquid's expansion into commodity perpetual contracts, citing risks of market manipulation and concerns about market integrity. CME even filed a lawsuit against the CFTC regarding its stance on crypto perpetual contracts. Traditional exchanges will not stand idly by and allow an on-chain protocol to take a slice of their market share, especially in the regulated derivatives market, which CME considers its core territory.

Ultimately, the outcome of this story depends on a deeper game: how much institutional space US regulators are willing to create for DeFi, and how much product purity DeFi is willing to sacrifice to enter the US market.