Cumberland Raises Regulatory Concerns Over Hyperliquid’s U.S. Perpetual Futures Plans
Crypto market maker Cumberland has raised questions about plans to bring Hyperliquid’s perpetual futures trading to the U.S., warning that the platform’s on-chain design could create privacy, execution and regulatory challenges under Commodity Futures Trading Commission (CFTC) rules.
Don Wilson, Cumberland’s co-founder and CEO, outlined four areas of concern as Intercontinental Exchange (ICE)-backed efforts to expand Hyperliquid’s perpetual futures markets into the U.S. take shape. His questions focus on whether the platform’s trading structure aligns with the core principles governing CFTC-regulated markets.
Cumberland Questions the Need for On-Chain Perpetual Futures
Wilson questioned whether offering perpetual futures on a blockchain provides a meaningful advantage when centralized exchanges can offer similar products. Perpetual futures, commonly known as perps, allow traders to obtain leveraged exposure to assets without an expiry date or the need to hold the underlying spot asset.
Coinbase, Kalshi and other platforms already operate within regulatory frameworks that allow them to offer derivatives products. Wilson’s concern is whether Hyperliquid’s on-chain model provides enough additional value to justify the potential complications associated with bringing it into the U.S. regulatory system.
Hyperliquid’s Transparent Order Book Raises Privacy Questions
Another issue is the visibility of trading activity. Wilson contrasted the partial anonymity of participants in CFTC-regulated markets with Hyperliquid’s transparent order book, where wallet addresses and transactions can be monitored publicly.
Wilson also directed a question toward billionaire investor Stanley Druckenmiller, one of the backers of the deal, asking whether he understood that trading on Hyperliquid could allow the public to follow positions and trades in real time, and whether that transparency should be considered an advantage.
Rebecca Rettig, legal chief at Jito Labs, said privacy solutions could potentially address some of the concerns surrounding transaction visibility. However, she agreed that another issue could prove more consequential: whether the U.S. order book would share liquidity with Hyperliquid’s larger international market.
Order Book Separation Could Limit U.S. Liquidity
Combining U.S. and offshore order books could be difficult under separate regulatory requirements. The source points to Binance U.S. as an example of the potential consequences of maintaining separate markets, noting that its liquidity is thinner because it does not share an order book with the global Binance platform.
Ark Invest has also expressed skepticism about the effectiveness of a similar U.S. expansion for Hyperliquid. The extent to which the U.S. market could access global liquidity remains an important question for the proposed arrangement.
Wilson also raised concerns about potential front-running involving Hyperliquid’s priority-fee mechanism. Together with questions over order book integration and transaction transparency, these issues could create trading inefficiencies and regulatory obstacles.
ICE and Kraken Explore Routes Into the U.S. Market
The ICE and Trade [XYZ] route is not the only potential path for Hyperliquid’s U.S. expansion. The platform is also exploring a route involving Kraken, with both approaches linked to the development of HIP-3 markets.
How the CFTC will respond to the issues raised, and which proposed route will prove viable, remains uncertain.
Hyperliquid Revenue and HYPE Price Performance
Hyperliquid has expanded its revenue sources beyond conventional trading fees to include yield from USDT reserves and deployer perpetual futures markets. HIP-3 is being explored by Kraken and ICE as part of these potential developments.
Hyperliquid’s monthly revenue rose from about $60 million in July to nearly $120 million in September, doubling over that period.
Approval for the proposed Kraken and ICE markets could provide another source of revenue for the platform and potentially support the value of its HYPE token, although those outcomes are not guaranteed.
HYPE gained 20% following the ICE update on Thursday, October 29, but subsequently gave up those gains over the weekend. The token was trading at $87 at the time of the source report.
source: ambcrypto
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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