Reports indicate that CME Group and the parent company of the NYSE, ICE, are urging US regulators to tighten oversight of Hyperliquid, due to concerns related to market manipulation and the risk of contact with sanctioned entities.
This headline is significant because it highlights the increasingly fierce competition between traditional exchanges and rapidly growing decentralized finance (DeFi ) platforms, as they vie for Derivative liquidation and the ability to determine prices on a global scale.
CME and NYSE want to regulate Hyperliquid as DeFi booms.
The focus of the discussion was Hyperliquid, a high-speed on-chain Derivative platform offering 24/7 trading, deep liquidation , and leveraged perpetual contracts.
The rise of Hyperliquid is challenging the dominance of traditional exchanges like CME in the crypto Derivative and commodity-related Futures Contract markets. Supporters argue that transparency and blockchain-based transaction settlements have reduced counterparty risk for users.
Critics argue that the permissionless model could lead to vulnerabilities such as spoofing, wash trading, and increased risk from sanctioned individuals participating in trading.
Differences in operational structure
Many analysts mistakenly call Hyperliquid an exchange. A typical exchange only acts as a matchmaker between buyers and sellers, collecting fees without caring whether the price goes up or down.
CME and NYSE do not accept market risk. Their revenue is completely neutral, not dependent on whether traders win or lose.
Hyperliquid is different. Instead of operating as a neutral infrastructure, Hyperliquid coordinates liquidation through an internal wallet called HLP (Hyperliquidity Provider).
HLPs provide liquidation through market-making strategies, handle asset liquidation, supply USDC for Earn, and collect transaction fees. In essence, HLPs Vai as the inverse counterparty to traders.
Therefore, the relationship becomes unequal: when the trader loses, HLP receives the profit; conversely, when the trader wins, HLP bears the loss. This makes HLP's business results directly tied to the user's trading results, instead of being neutral like traditional exchanges.
Hyperliquid is also generating approximately $65 million in transaction fees per month, equivalent to nearly $700 million annually.
A large portion of this revenue is used to buy back HYPE Token through the Assistance Fund. This creates a cycle: more transactions mean more fees, fees are used to buy back Token, and rising Token prices attract even more traders, further boosting activity on the platform.
Market context: 24/7 trading pressure
Traditional exchanges still operate within fixed trading hours, while Hyperliquid is open 24/7. This difference is becoming increasingly important, especially during periods of high market volatility, when the Vai of price setting shifts to native crypto platforms while traditional markets are closed .
This puts pressure on traditional giants to modernize their infrastructure and extend trading hours to keep up with the market.
US regulators, including the CFTC, have signaled increased scrutiny of cross-border and decentralized Derivative platforms.
Although no official action has yet been taken against Hyperliquid, this debate highlights growing concerns regarding compliance standards, protection of retail investors, and financial stability in decentralized markets.
The next phase will depend on whether regulators issue separate regulations for decentralized Derivative or apply the existing futures market framework to on-chain platforms.
Regardless, the battle between Wall Street infrastructure and DeFi liquidation is no longer just theory but has become a regulatory priority for authorities. The outcome of this confrontation could completely alter the structure of the global Derivative market.
