Trump wants to bring an obscure crypto platform to the US. Wall Street will be watching.
Trump wants to bring an obscure crypto platform to the US. Wall Street will be watching.
Hyperliquid allows users to make 24/7 bets on the price of assets tied to stocks, gold, and oil, a feature that helped launch the three-year-old platform into the spotlight earlier this year as one of the only oil-trading hubs that was open over the weekend when the Iran war kicked off.
It does so by allowing traders to borrow money to amplify their bets thanks to a controversial product known as perpetual futures, or perps. Hyperliquid users can turbocharge their wagers by as much as 40 times on certain assets. But such so-called leverage cuts both ways — and when a bet goes awry, it can exacerbate a trader's losses.
"It's just a supercharged way of gambling," said Benjamin Schiffrin, director of securities policy at the financial industry watchdog group Better Markets. "Everybody agrees with the idea that our markets are the envy of the world, but the reason is because we have protections to ensure that people aren't exposed to unnecessarily risky products."
CME Group CEO Terry Duffy has warned that perps products more broadly could bring about a "2007 for retail."
Perps are not exclusive to Hyperliquid. The products are widely available within the crypto markets — and are massively popular with everyday traders.
Yet their recent introduction into the U.S. has drawn fierce resistance from the Chicago-based exchange giant CME, which in June sued over the CFTC's approval of the products, as well as consumer watchdogs and even some agricultural groups. Critics also worry about the potential price dislocations that could happen on weekends and the fact that Hyperliquid, despite any regulatory guardrails around the platform, is already influencing oil prices around the world.
Singapore-based Hyperliquid Labs, the main developer behind the platform, didn't respond to a request for comment.
"If the United States fails to keep pace with rapid advances in trading and markets, we risk ceding our reputation as the global hub of financial innovation," CFTC spokesperson Beau Brooks said in a statement. "Under Chairman Selig's leadership, the CFTC is committed to promoting fair access and responsible innovation so that the next generation of our financial markets are built here in America and not overseas."
Leverage is a "feature, not a bug, of the derivatives markets" that is used by traders of all stripes, Hyperliquid Policy Center's Chervinsky said. But the CFTC is not going to allow the steep leverage ratios that are currently available offshore, he added, calling it "unfounded" to think that regulators would sign off on "extremely high amounts of leverage just because some markets offshore are offering that."
Still, for Hyperliquid's backers, the platform is much more than just a hub of speculative trading. They view it as a technological feat able to solve some of the speed and cost issues that have bogged down past efforts within crypto to take on traditional finance. And the platform, they say, has a clear place in the industry — and in the U.S.
"Markets like choices, and having more interesting ways to trade is a good thing," said David Schamis, CEO of Hyperliquid Strategies, a publicly traded company devoted to holding Hyperliquid's own crypto token, HYPE. "They built a very good platform that's extremely resilient, that can handle tremendous volumes, that's easy to use. It's just a better mousetrap for trading" perps.
The Hyperliquid Policy Center has tapped BGR Group's Andy Lewin, Matt Hoffmann, and Keaghan Ames for help as it lays the groundwork for Hyperliquid on the policy side, according to lobbying records. And Colin Lloyd, a partner at Sullivan & Cromwell, is involved in the talks with the CFTC about how to bring the platform Hyperliquid onshore, according to a person familiar with the matter. BGR and Lloyd declined to comment.
Despite its rise, Hyperliquid still deals in a relatively niche product whose long-term place in U.S. finance is undetermined. Some Wall Street executives, including Intercontinental Exchange Founder and CEO Jeffrey Sprecher, who is married to Small Business Administrator Kelly Loeffler, have even expressed admiration for Hyperliquid's developers, despite investor fears over what perps and perp-centric platforms like Hyperliquid could mean for their business models.
But Sprecher, whose company owns the New York Stock Exchange, still isn't ready to pile into perps. He said in a recent Bloomberg TV interview that his clients are focused on hedging — or using the markets to offset the financial risks of everything from further turmoil in the Middle East to a bad corn harvest.
Perps, he added, aren't built for those traders.
"I don't view it as a particular threat to the traditional exchange space" at the moment, another exchange executive said of Hyperliquid. "It's not a plug and play for an existing customer."
Chervinsky acknowledges that perps aren't going to be a perfect fit for everyone. But in his eyes, neither they nor Hyperliquid are going anywhere — and Wall Street might be best to get on board sooner rather than later, he said. Trump is, after all.
"This is an opportunity, not a risk," Chervinsky said. "The market participants who will succeed in the next generation of financial innovation are those that embrace this type of technology — rather than shut their eyes and hope that it goes away."
This article has been published in [yahoo.com](https://yahoo.com) via Yahoo News.
Trump wants to bring an obscure crypto platform to the US. Wall Street will be watching.
Hyperliquid, a little-known but buzzy cryptocurrency exchange, has rocked Wall Street this year. Now President Donald Trump’s regulators are pushing to bring it to the U.S.
finance.yahoo.com
