Tag: Crypto perpetual futures

Hyperliquid could face a 10-to-12-month regulatory process to enter the U.S. market, even if federal agencies move quickly, according to former U.S. Securities and Exchange Commission senior counsel Ashley Ebersole. The estimate follows President Donald Trump’s statement that regulators were working on a compliant route for the perpetual futures platform.

Ebersole, co-founder and chief legal officer at tx, told crypto.news that the main challenge is not simply obtaining approval for Hyperliquid to operate in the United States. Regulators would first need to determine how offshore-style crypto perpetual futures fit within existing securities and derivatives laws.

Trump highlighted the issue on Aug. 19 during a White House meeting with crypto and financial industry executives. He said Commodity Futures Trading Commission Chair Michael Selig was working to bring Hyperliquid into the United States in a “fully compliant and legal fashion.” Contemporary reports did not identify an approval, regulatory structure, or timetable for the proposed move.

The comments came as the administration urged Congress to advance the Digital Asset Market Clarity Act. As previously reported by crypto.news, Trump used the same Aug. 19 meeting to call on lawmakers to pass the legislation, which would establish clearer boundaries between SEC and CFTC oversight of digital assets.

Hyperliquid would need more than CFTC approval

U.S. law does not currently provide a straightforward route for offering crypto perpetual futures to American retail customers in the same form commonly available on offshore platforms, Ebersole said.

The CFTC would probably have primary jurisdiction over perpetual contracts tied to commodities, including crypto assets that are not securities. Contracts based on securities, however, could fall under the SEC’s authority as security-based swaps or other securities-linked products.

“The threshold issue is that U.S. law does not currently provide a straightforward regulatory pathway for offering crypto perpetual futures to U.S. retail customers in the form in which they trade offshore,” Ebersole said.

A compliant Hyperliquid structure could require registrations covering the trading venue, clearing operations and intermediaries. Ebersole said designated contract market, or DCM, and derivatives clearing organization, or DCO, infrastructure could form part of the process, with separate SEC requirements applying when securities are involved.

Registration would address only part of the challenge. Federal agencies would first need to determine whether Congress had already granted them sufficient authority over the products and then establish rules allowing perpetual futures to be legally offered.

“The harder problem is not simply obtaining a registration; it is that the existing U.S. regulatory architecture was not designed around offshore-style perpetuals, so a lot of regulatory ‘building’ would be needed.”

Regulators could use formal rulemaking, exemptive relief or a combination of both to create such a pathway, Ebersole added.

Part of that debate is already underway. In July, the Hyperliquid Policy Center and Phantom asked the CFTC to develop rules tailored to onchain markets instead of applying requirements designed for traditional intermediaries. The groups argued that decentralized software developers and non-custodial wallet providers should not automatically face the same registration obligations as conventional financial firms.

SEC and CFTC jurisdiction would depend on the underlying asset

Dividing responsibility between the two federal agencies would create another layer of regulatory work.

Ebersole compared the issue with the framework established after the Dodd-Frank Act, which divided federal oversight between swaps regulated by the CFTC and security-based swaps overseen by the SEC. In his view, crypto perpetuals could follow a similar principle, with jurisdiction determined by each contract’s economic exposure.

A perpetual based on a security or group of securities would generally involve the SEC, while a contract tied to a commodity would normally fall under the CFTC’s derivatives authority, he said.

More complex questions could emerge when spot assets and derivatives interact within the same trading ecosystem. According to Ebersole, those arrangements could create edge cases requiring coordination between both regulators, similar to the detailed jurisdictional boundaries the agencies developed after Dodd-Frank.

The issue is particularly relevant to equity-linked perpetuals. On Aug. 24, the Hyperliquid Policy Center proposed treating qualifying equity perpetuals as security futures under an existing structure jointly overseen by the SEC and CFTC. The organization said HIP-3 markets had processed more than $480 billion in cumulative notional volume during their first 10 months.

Several days earlier, the Policy Center and trade[XYZ] had submitted five proposed pillars to the SEC for regulating pre-IPO perpetual contracts. The SEC had published the submission but had not endorsed or approved the proposed products.

A U.S. Hyperliquid pathway could take 10 to 12 months

Even with political support, Ebersole expects the administrative process to take considerably longer than the technical work required to offer the products.

His 10-to-12-month estimate assumes that the SEC and CFTC actively decide to establish a route for perpetual futures. Regulators would first need to identify their statutory authority, develop a framework and prepare any required rules or exemptions.

A formal rulemaking process could then require the agencies to publish proposals, collect public comments, review those submissions, adopt final measures and implement the resulting framework.

“The 10-to-12-month estimate assumes a lengthy procedure phase that’s principally about administrative process rather than technological implementation,” Ebersole said.

A faster process could be possible if regulators relied substantially on powers and exemptions already available to them.

“Could that happen in six months? Potentially, particularly if the agencies rely heavily on existing authorities or exemptive mechanisms.”

Ebersole cautioned that the longer estimate already assumes regulators want the process to succeed. Litigation, disagreements between the SEC and CFTC, changing political priorities or a conclusion that Congress must first pass legislation could delay any U.S. launch further.

U.S. traders already have limited exposure to perpetual products under regulated structures. In June, Kalshi filed with the CFTC to list perpetual futures linked to HYPE after launching Bitcoin and Ethereum perpetual contracts for U.S. customers.

Access to Hyperliquid itself remains more restricted. Coinbase added more than 290 Hyperliquid-powered perpetual markets to its Base App on Aug. 19, with leverage reaching as high as 50x on supported contracts. U.S. users were excluded, along with users in the United Kingdom and Canada.

Existing law could offer a faster but less certain route

Rather than waiting for Congress, the SEC and CFTC could conclude that their existing statutory powers are sufficient to establish a regulated framework, according to Ebersole. That approach could shorten the process, particularly if the agencies used exemptions alongside existing derivatives and securities rules.

A legal constraint remains after the U.S. Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo, which ended the Chevron doctrine that had directed courts to defer to reasonable agency interpretations of ambiguous federal statutes.

“An agency cannot create statutory jurisdiction simply by interpreting an ambiguity in its favor,” Ebersole said.

If an SEC or CFTC interpretation were challenged, a court would independently determine whether Congress had actually granted the agency authority over the product, he said. Agency reasoning could still carry persuasive weight, but it would not receive Chevron-style deference simply because the underlying statute was ambiguous.

Congressional action would therefore provide a cleaner legal route, according to Ebersole. Lawmakers could expressly authorize perpetual products, divide responsibility between the SEC and CFTC and establish the limits of each regulator’s authority.

That route carries its own timing problem. Ebersole said the congressional process could take considerably longer and might not result in a law at all.

The question is particularly relevant while the CLARITY Act remains unresolved in Washington. The legislation seeks to establish federal boundaries between digital commodities and securities, giving the CFTC additional authority over qualifying digital commodity markets while allowing the SEC to retain jurisdiction over securities.

A U.S. perpetual futures framework would extend beyond Hyperliquid

Any regulatory route created for Hyperliquid would also affect competing U.S. trading platforms, Ebersole said.

Federal regulators could not realistically establish a lawful framework that applied only to one company. Once the SEC and CFTC set requirements for offering crypto perpetual futures, other firms meeting the same regulatory standards would have grounds to seek permission to offer comparable products.

“Whatever pathway regulators create for Hyperliquid cannot realistically be Hyperliquid-specific,” Ebersole said.

Coinbase, Kraken and other appropriately registered platforms would therefore have a strong basis to pursue similar products if regulators establish a workable U.S. framework, according to Ebersole.

“The larger significance of onshoring Hyperliquid is not simply whether one offshore platform can enter the United States. It is whether regulators are prepared to welcome a major product category that has largely developed outside the U.S. to regulated domestic competition.”