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Bloomberg reports that the Chicago Mercantile Exchange (CME) and Intercontinental Exchange (ICE) are pressuring financial regulatory agencies to regulate Singapore-domiciled, blockchain-based exchange Hyperliquid.
What's the Scoop?
- Sounding the Alarm: CME and ICE are reportedly lobbying the CFTC and U.S. lawmakers to crack down on Hyperliquid, claiming the offshore crypto exchange is a vector for market manipulation in global oil markets. The exchange operators argue that anonymous trades conducted via
Hyperliquid can inform prices in traditional markets, undermining how oil prices are set and "chipping away at the integrity of the benchmarks that producers, airlines, refiners and traders rely on to price everything from gasoline to airfare." - Required Registration: According to Bloomberg, CME and ICE want Hyperliquid to register with the CFTC, a move that would require the platform to implement customer identification programs and trade surveillance measures that appear be fundamentally at odds with its current anonymous trading model.
What's the Take?
Since launch, Hyperliquid has remained highly centralized. While the HyperEVM is now operated by 31 validators – an improvement from its early architecture, but still limited compared to truly decentralized networks – the protocol’s bridge – which serves as the single point of custody for all deposited user funds – is secured by just a 3-of-4 multisig wallet.
It would be a straightforward process for U.S. regulators to enforce compliance against Hyperliquid, which almost certainly serves U.S. users despite relying on weak and easily circumvented IP-based restrictions.
Annie Massa and Mia Gindis and Lydia Beyoud
