A Joke by Hyperliquid's Founder Becomes a Reality on Wall Street

Author: Jae, PANews

A joke from a year ago has now become a reality. Hyperliquid founder Jeff once told the CEO of ICE that if ICE ever adopted Hyperliquid technology, it would mean success. With this vision now realized, Hyperliquid's story with traditional financial giants has taken a new turn.

On October 29, the parent company of the New York Stock Exchange, ICE, announced an agreement with the on-chain perpetual platform Trade[XYZ] to acquire a minority stake and jointly build a compliant perpetual contract trading and clearing market based on Hyperliquid in the United States.

Almost simultaneously, another financial giant is also accelerating its layout. On October 26, Kraken's parent company Payward disclosed its plan to leverage its licensed brokerage and clearing house to become the first deployer of the Hyperliquid HIP-3* market regulated by the CFTC (U.S. Commodity Futures Trading Commission), opening the door for U.S. users to compliant on-chain perpetual contracts.

The two giants are almost simultaneously positioning themselves in Hyperliquid. This indicates that the competitive dimension of the U.S. perpetual contract market is entering a phase of on-chain infrastructure positioning under a compliant framework.

ICE Partners with Trade[XYZ]: Protecting Institutional Stock, Targeting Retail Growth

Last night, Wall Street hedge fund manager Stan Druckenmiller announced a significant investment in Trade[XYZ], sparking discussions both inside and outside the industry. At the same time, he expressed his anticipation for Hyperliquid's perpetual contracts entering the U.S. market, making this collaboration highly anticipated.

ICE's entry is driven by a typical expansion strategy of traditional financial giants: maintaining the existing base while using new products for growth.

ICE Chairman and CEO Jeffrey Sprecher stated that on-chain compliant perpetual contracts are a supplement to the traditional futures market. This means that ICE aims to carve out a new territory in the retail market while maintaining its institutional business.

In fact, ICE's strategic approach to this market has shown signs for some time. In August of this year, Jeffrey Sprecher, when asked in an interview with Bloomberg whether ICE would directly launch its own perpetual futures products, stated that ICE prefers to partner with those who "have the distribution channels that ICE lacks."

This indicates that rather than building retail user channels from scratch, ICE hopes to leverage the user base and distribution capabilities of crypto-native platforms to quickly penetrate markets it previously covered inadequately. In ICE's traditional futures and clearing business, institutional clients account for over 99%. The traditional futures market serves the needs of hedging, long-term risk management, and forward price discovery. In contrast, on-chain perpetual contracts open up another market: retail investors who are accustomed to high-frequency trading, prefer short-term directional bets, and require 24/7 uninterrupted trading. This is a market that ICE has not deeply penetrated before.

According to the official announcement, ICE, Trade[XYZ], and Hyperliquid each have their roles: Trade[XYZ] is responsible for product design and market deployment, Hyperliquid provides trading infrastructure, and ICE operates the compliant trading venue and clearing system. The targets are not limited to cryptocurrencies but extend to stocks, stock indices, commodities, foreign exchange, and other assets, aiming at retail users who want to gain short-term market exposure around the clock.

ICE's choice of Trade[XYZ] is not coincidental. As a leading HIP-3 deployer in the Hyperliquid ecosystem, Trade[XYZ] has exceeded $650 billion in trading volume within a year of its launch, contributing over 90% of the open contract size in the HIP-3 market, with its product capabilities already validated by real market performance.

To address customer acquisition issues, ICE has also partnered with OKX. The joint venture will take on the role of retail distribution channel, connecting OKX's user base with the compliant market operated by ICE. Users will need to open accounts through FCM (Futures Commission Merchant) and complete the full KYC (Know Your Customer) / AML (Anti-Money Laundering) processes to trade.

However, the relevant FCM and brokerage qualifications of the ICE and OKX joint venture, as well as the new compliant perpetual contract market, still require regulatory approval.

In other words, ICE is not directly bringing U.S. users to the offshore Trade[XYZ], but rather embedding mature on-chain trading technology into a U.S.-regulated trading and clearing framework. Frontier technology investor Didier pointed out that this market will likely have an independent order book, and each compliant market must reorganize liquidity. U.S. customers can only execute orders in their respective markets and cannot directly replicate the depth of the offshore market.

ICE also emphasized that the new business will be isolated from the original system to prevent high-leverage retail risks from being transmitted to institutional clients. This is both a risk control choice and a key posture to gain regulatory approval.

Payward's Licensed On-Chain "Land Grab" for HIP-3 Compliant Market*

Unlike ICE's approach of building a new market from scratch, Payward has taken a lighter and faster route: utilizing the regulatory licenses it has acquired to open a licensed compliant trading market on Hyperliquid.

Payward's layout has been foreshadowed for some time. In May of this year, it completed the acquisition of the derivatives platform Bitnomial, acquiring a full set of CFTC regulatory licenses including Designated Contract Market (DCM), Derivatives Clearing Organization (DCO), and Futures Commission Merchant (FCM). Looking back, this combination was prepared for the landing of on-chain compliant perpetual contracts.

According to Payward's design, Bitnomial Exchange, as a CFTC-regulated DCM, is responsible for contract listing and market operations; Bitnomial Clearinghouse, as a DCO, is responsible for clearing and settlement; NinjaTrader Clearing, as an FCM, is responsible for customer account management; and Hyperliquid is responsible for providing the infrastructure for on-chain order books and trading records.

In this hybrid model of "on-chain matching + licensed institutional operation + regulated clearing," the pivot is the HIP-3 framework.*

It adds optional access control features on top of the existing HIP-3: market operators can manage an on-chain whitelist, allowing only accounts that have completed compliance reviews to enter the corresponding market for trading. In simple terms, it creates a regulated "closed trading zone" on the underlying public chain, with liquidity also isolated from the offshore market.

In Payward's proposal, U.S. customers need to open accounts through NinjaTrader and enter the dual whitelist with Bitnomial to trade compliant perpetual contracts. This design brings user identity, funds, and trading behavior into the regulatory view while retaining the transparency and execution efficiency of on-chain order books.

Currently, the first version of HIP-3 is still in the testing phase, and the official specifications have not yet been finalized.* The existing open HIP-3 market will not be affected by it. However, its emergence is equivalent to equipping Hyperliquid with a "compliance module": if one wants to create an open market, they can use HIP-3; if they want to create a compliant market, they can go to HIP-3*, with the same infrastructure serving two different environmental requirements.

Payward's Head Start vs. ICE's Slow Start: Who Has the Advantage?

Both are bringing Hyperliquid into the U.S. compliant market, but ICE and Payward are taking two completely different paths, with significantly different advancement paces.

In terms of speed to market, Payward is likely to gain a first-mover advantage. Its subsidiaries Bitnomial and NinjaTrader are already licensed entities registered with the CFTC, with complete exchange, clearing, and brokerage licenses, avoiding the lengthy application process that can take years. The customer system, fund management, and risk control framework can be partially reused, equivalent to "old wine in new bottles," embedding on-chain technology into existing compliant pipelines.

ICE's burden is much heavier. It not only has to build a new trading market and clearing system on Hyperliquid but also wait for the approval of state brokers and NFA/CFTC qualifications for its joint venture with OKX. More complex is the fact that Trade[XYZ] focuses on tokenized stocks, commodity indices, and other cross-category perpetual contracts, involving overlapping jurisdiction issues between the SEC and CFTC; each additional asset class adds another regulatory hurdle.

From the target audience perspective, the two are also different:

• ICE is targeting a broader base of U.S. retail traders and is also trying to attract international compliant users through OKX's channels, with a wider range of targets and greater ambition, aiming to build a new market from scratch;
• Payward's base primarily consists of existing qualified customers within the Kraken and NinjaTrader ecosystems, more like converting existing users to a new product line of compliant on-chain perpetual contracts, prioritizing the activation of existing stock.

Regardless of who lands first, they both point to the same outcome: Hyperliquid is transitioning from an offshore DeFi protocol to a universal infrastructure for the U.S. compliant perpetual contract market.

The Entry of Two Giants Benefits Hyperliquid, and the Value of the Industry Chain Awaits Reevaluation

The entry of these two giants not only benefits Hyperliquid but may also lead to a repricing of the entire industry chain.

Infrastructure Level: Hyperliquid is Transitioning from a Trading Platform to Compliant Derivatives Infrastructure

The most direct beneficiary is undoubtedly Hyperliquid. After the news was released, the HYPE token surged over 20% in the past 24 hours, returning to the $90 mark.

The deployment mechanism of HIP-3 requires third-party operators to stake at least 500,000 HYPE to build their own markets. If compliant exchanges adopt this model, Hyperliquid's positioning will shift from a DeFi protocol to supporting derivatives infrastructure for multiple traditional operators.

However, the clearing rules, fee allocation, and revenue sharing for the on-chain compliant perpetual contract market have not yet been clarified in commercial terms. One cannot simply extrapolate the trading volume of the compliant market into Hyperliquid's fee income and token price. The liquidity of the compliant market is isolated, and the value capture methods may differ from those of the offshore market.

Liquidity Level: USDC May Welcome New Application Scenarios

Currently, the Hyperliquid market uses USDC as the primary margin and settlement asset. If the compliant perpetual contract market continues to use stablecoin fund management, it will drive on-chain liquidity demand.

In May of this year, Circle announced that it would serve as the technical deployment partner for USDC's Aligned Quote Asset and expand the staking scale of HYPE. Trading margins, profit and loss settlements, and cross-system fund scheduling may all become new scenarios for USDC.

It is important to note that U.S. regulations have strict requirements for customer asset segregation, qualified collateral, and custody arrangements, and the compliant market may not necessarily use USDC as margin and settlement assets. The degree of benefit for stablecoins will depend on regulatory definitions of collateral.

Supporting Layer: Oracles and Cross-Chain Have Potential Demand

Pyth is another key player. It is the main price data provider for Hyperliquid markets such as Trade[XYZ], covering all categories including stocks, commodities, and foreign exchange, specifically providing oracle services for HIP-3 deployers. The more compliant markets there are, the greater the demand for oracle calls.

Cross-chain protocols also have growth potential. Hyperliquid natively supports asset bridging with Arbitrum, and third-party cross-chain service providers such as Across and deBridge have already integrated into the ecosystem. User funds being scheduled across multiple chains, exchanges, and custody accounts will generate more cross-chain demand.

However, institutional compliance often has its own rules: address screening, trading permission controls, and customer fund segregation requirements are not yet directly met by existing decentralized cross-chain and oracle solutions.

Not all protocols integrated with Hyperliquid can seamlessly serve the compliant businesses of ICE and Payward. Those that have the opportunity to be adopted must prove their irreplaceability in compliance, security, and efficiency.

Conclusion: On-Chain Finance with a Leash

The sequential entry of ICE and Payward may symbolize a significant turning point in the development of on-chain derivatives.

In the past, traditional finance viewed DeFi as an unregulated counterpart; now, they are actively entering the on-chain world, taking DeFi's underlying technology and fitting it into familiar regulatory frameworks to create compliant products for users.

For Hyperliquid, this is a leap in identity. From the leader in offshore market perpetual contracts, it has become a financial infrastructure recognized by the regular army. But the cost is also significant: real-name access, account segregation, and liquidity cuts; those open attributes that once made DeFi vibrant will be constrained in the compliant market.

On-chain perpetual contracts have reached a dividing line: one is an open, anonymous, globally liquid offshore market, and the other is a compliant, real-name, liquidity-isolated regulated market. They share the same infrastructure but operate under different rules.