Hyperliquid’s rapid growth has prompted a warning from Britain’s financial regulator, adding a consumer protection concern to a platform increasingly scrutinized by Wall Street and traditional market operators.
The Financial Conduct Authority (FCA) placed Hyperliquid and the Hyper Foundation on its warning list, saying the company may offer or promote financial services in Britain without authorization.
In a message dated May 21, the financial regulator declared:
“You should avoid doing business with this company and beware of scams.”
The regulator listed the Hyper Foundation website, Hyperliquid trading app and the project’s social media channels among the unauthorized company data.
It also warned that users would not be able to access the Financial Ombudsman Service if they wanted to make a complaint and that they would not be covered by the Financial Services Compensation Scheme if they lost money.
The announcement comes as Hyperliquid expands beyond crypto-native trading into markets that increasingly overlap with traditional finance.
Hyperliquid is a decentralized, non-custodial derivatives exchange that allows users to trade perpetual futures, contracts that provide leveraged exposure without expiration dates.
Over the past year, the platform has become an important part of offshore crypto trading as it allows traders to keep positions open indefinitely while speculating on price movements.
In Britain, crypto derivatives have faced tighter limits since the FCA banned their sale to retail consumers in 2021. The country also expanded financial promotion rules to crypto assets in 2023, requiring companies marketing to British users to meet stricter standards.
Considering this, Kyle Samani, President of Solana Treasury Company Forward Industries, said: described the FCA action as the “first of many,” indicating that some investors expect Hyperliquid’s growth to draw more attention from regulators as the platform moves closer to markets watched by traditional financial institutions.
Traditional exchanges bring the fight to Washington
The UK warning came as Hyperliquid was already under scrutiny from some of the biggest players in the US derivatives markets.
Last month, executives from CME Group and Intercontinental Exchange raised concerns with the Commodity Futures Trading Commission (CFTC) about Hyperliquid’s growing perpetual futures market.
They warned that the platform could pose risks to traditional commodity markets, especially oil. Their concerns center on whether a decentralized trading platform with limited identity checks could allow traders to manipulate prices, coordinate around market-sensitive information, or evade sanctions.
Additionally, CME and ICE warned that activity on Hyperliquid could impact global oil benchmarks if state-backed entities or sanctioned actors use the platform to gain exposure outside of traditional oversight.
This setback shows how Hyperliquid’s growth has broadened the debate on decentralized finance.
For years, most DeFi platforms competed primarily for crypto liquidity. Hyperliquid’s HIP-3 markets have brought that model closer to traditional finance by enabling synthetic exposure to equities, commodities and private companies.
Notably, Hyperliquid said open interest on real assets on the platform reached a record $3 billion, with HIP-3 setting a new open interest record every month since its launch in October 2025.
The platform operates continuously and gives traders access to leveraged markets at any hour, even when traditional exchanges are closed.
That structure has helped attract traders who want to react immediately to earnings, geopolitical developments, policy announcements and macroeconomic data that can move sentiment in the oil, stock and private markets outside of standard trading hours.
For CME and ICE, the same structure raises concerns about market integrity. Both exchanges operate under regulatory frameworks that include approved contracts, clearing requirements, supervisory systems, margin rules and customer protection standards.
Hyperliquid offers a different model built around public blockchain records, open access, and less conventional gatekeepers.
The dispute also has a commercial advantage. As liquidity in commodities, stock indices and other traditional assets shifts to on-chain platforms, established exchanges could face pressure from platforms that offer lower fees, faster product launches and 24-hour trading.
CFTC opens a regulated path for perpetual futures
Despite these concerns from the traditional financial giants, the U.S. regulatory framework is shifting as officials begin to create approved channels for perpetual futures, the product category central to Hyperliquid’s growth.
Last month, the CFTC approved Kalshi’s Bitcoin perpetual futures contract for listing on a registered derivatives exchange.
The agency too issued policies for perpetual derivatives and 24-hour trading, while staff provided interpretive guidance and took no action regarding Coinbase’s access to certain perpetual Deribit products through a subsidiary.
The actions demonstrate that U.S. regulators are willing to bring perpetual futures to regulated markets when they are offered through approved platforms and subject to existing supervision.
That shift is important for Hyperliquid as perpetual futures remain central to exchange activity and to the broader offshore crypto derivatives market.
It also changes the competitive landscape. Regulated companies like Kalshi and Coinbase now have clearer routes to serving US customers through recognized market infrastructure.
Hyperliquid remains outside that framework and blocks US residents from direct access.
Still, the Hyperliquid Policy Center welcomed the CFTC’s actions, saying they represented a long-overdue recognition that perpetual derivatives can support price discovery and risk management.
The group said years of regulatory uncertainty have pushed the market abroad and weakened U.S. competitiveness in global derivatives.
The organization also pushed back against claims that Hyperliquid’s structure facilitates misconduct. It says the platform publishes a full on-chain record of every transaction in real time, creating a transparent environment for monitoring, detection and investigation by regulators and law enforcement agencies.
“Hyperliquid offers enhanced market transparency,” the group said saidadding that continuous trading improves price discovery because markets move regardless of whether existing exchanges are open or closed.
The answer reflects the main argument of Hyperliquid’s supporters: on-chain markets can provide a more open and efficient structure, with public records replacing parts of the reporting and surveillance systems used by traditional exchanges.
Former Boston Fed President Eric Rosengren did that be to a broader move towards cheaper, 24-hour trading in financial assets.
He said liquidity is moving to decentralized exchanges and away from more expensive centralized locations, echoing Hyperliquid’s call to professional traders looking for speed, access and less friction.
According to him:
“Hyperliquid has an active market for many commodities, equities, pre-IPO stocks and crypto. The gold, silver and oil markets have been active over the weekend given the government’s tendency to make announcements on the weekend. 24/7 exchanges means 24/7 trading.”
Hyperliquid faces difficult paths from here
Market observers noted that regulatory pressure leaves Hyperliquid with a tougher question about how much of its current model can survive if the platform wants deeper access to regulated markets.
Derek Edwards, managing partner of venture capital firm Collab Valuta, said Hyperliquid is a killer product, but it faces several limitations if it wants to reach US users and institutions more directly.
He outlined five possible paths for the company, including remaining offshore, building a regulated US package, further decentralizing under market structure legislation, centralizing in a more conventional corporate exchange, or lobbying for a tailor-made regulatory framework.
However, none of these trails offer an easy route.
According to Edwards, staying offshore would allow Hyperliquid to maintain its current product and continue to serve global crypto traders. It would also leave U.S. institutional demand to regulated companies that can offer perpetual futures through approved platforms.
Meanwhile, a regulated U.S. wrapper could offer Hyperliquid an entry into the world’s largest capital market, but that structure would likely require separate client funds, more limited product lists and a compliance framework distinct from the global platform.
However, US futures rules would make it difficult to combine domestic customer collateral with offshore protocol margins, while approved products would likely focus on deeper, more liquid contracts rather than Hyperliquid’s broader range of markets.
Edwards noted that this approach could also complicate HYPE’s economics. If revenue from a regulated business platform were to flow into token buybacks, burns, or relief fund mechanisms, regulators could investigate whether token holders participate in an operating company’s profits.
That would raise additional questions about the securities law surrounding the token.
Meanwhile, a deeper decentralization drive could help Hyperliquid address some token classification issues under proposed market structure legislation like the CLARITY Act.
That path would likely require broader participation from validators, more decentralized lists, less emergency discretion, and slower, board-led upgrades.
These changes would entail strategic costs. Much of Hyperliquid’s growth has come from quick product decisions, tight execution, and the ability to launch markets quickly. More decentralized governance could strengthen the regulatory argument while slowing the rate at which the platform gains market share.
However, a more centralized structure would give regulators a clearer business counterparty, but it could weaken the network thesis around HYPE as a sign associated with protocol activity.
Finally, lobbying for a tailored framework could provide another route as the CFTC becomes more open to perpetual futures and 24-hour trading, although that process could take some time and still leave unresolved questions about token classification and derivatives rules.