Hyperliquid founder Jeff Yan is urging U.S. regulators to oversee the companies that operate markets on its blockchain rather than regulate the network itself as an exchange. Yan described the Layer 1 blockchain as shared financial infrastructure during an appearance on Bloomberg’s Odd Lots podcast, according to the source report. A Layer 1 network is a base blockchain on which applications and markets are built, meaning the network itself can stay distinct from the businesses operating on it.

Yan’s preferred approach would place compliance responsibilities on businesses that create, deploy and control markets on the network. He presented the proposal as his position, not as an existing classification under U.S. law.

Why Yan Favors Oversight at the Operator Level

“The regulation sits at the layer where there are controls, and indeed the deployers are the ones that exercise these controls,” Yan said.

Under his framework, regulators would focus on the firms exercising control over financial markets instead of treating the underlying blockchain as a single exchange. One blockchain can provide infrastructure for multiple independent financial services, allowing each market operator to remain accountable for compliance related to its own activities while using the same network.

The argument comes as traditional financial firms explore blockchain-based market infrastructure. BlockTelegraph has reported on financial institutions moving core operations onto blockchain networks, as well as Blockchain.com seeking CFTC registrations for derivatives and prediction markets. Those developments are separate from Yan’s proposal, but each concerns how regulated financial activity may operate alongside blockchain technology.

Hyperliquid Technology and U.S. Derivatives

Yan’s comments come as Kraken parent Payward reportedly plans to offer derivatives to U.S. investors using Hyperliquid technology through a regulated exchange, according to Bloomberg. The arrangement would put a Commodity Futures Trading Commission-regulated operator on the network — the CFTC is the federal agency that oversees U.S. derivatives markets — while Hyperliquid’s own perpetual futures platform remains closed to U.S. customers. Perpetual futures are a type of derivatives contract without a fixed expiry date, a format widely used in crypto trading.

Yan said Hyperliquid is not seeking to displace traditional financial institutions. “We’re not trying to displace anything,” he said, adding that he believes the technology can benefit firms that already operate markets in traditional settings. Hyperliquid’s official website is available at

The source describes Payward’s plan as a reported intention rather than a completed launch. It does not specify when the offering may begin or provide its terms.

BlockTelegraph has also covered other institutional blockchain projects, including LG CNS’s platform for financial institutions. That project is separate from Hyperliquid but likewise involves blockchain infrastructure designed for institutional use.

Regulatory Responsibility Remains Unsettled

The debate raises questions about responsibility when financial services operate on blockchain networks. Traditional exchanges are subject to rules governing trading venues and market intermediaries. Blockchain systems can separate network infrastructure from the firms operating markets, while developers, operators and users may have overlapping roles.

Yan argues that oversight should follow the entities exercising control over markets. He said this approach could allow institutions to use shared blockchain infrastructure while complying with rules relevant to their specific activities. U.S. regulators would still need to assess the activities and legal responsibilities involved.

His remarks follow President Donald Trump’s August statement that the CFTC was working to bring Hyperliquid under federal oversight. The source does not provide a year for that statement, and it does not say regulators have adopted Yan’s proposed framework.

For now, Yan’s position is that Hyperliquid can host regulated operators without the blockchain itself being registered as an exchange. The next step rests with regulators evaluating the specific businesses and activities using the network. The original BlockTelegraph report is available at https://blocktelegraph.io/yan-urges-us-hyperliquid-market-operators/.