Jake Travinsky, CEO of Hyperliquid Policy Center and former general counsel at Compound Labs, joins MC Later, founder and CEO of Native Markets and former president of Uniswap Labs. Jake brings extensive DeFi policy experience from the Blockchain Association and Variant, while MC has a background spanning BlackRock's digital assets division and Goldman Sachs special situations trading.

The conversation explores Hyperliquid's emergence as a 24/7 derivatives platform that processed significant volume during recent geopolitical events, particularly in real-world assets like oil and commodities. They discuss the regulatory challenges preventing US access, the competitive dynamics around USDH stablecoin adoption, and the policy framework needed to legitimize DeFi perpetuals trading in traditional finance.

TradFi Discovers Weekend Crypto Markets During Iran Crisis

Bloomberg coverage of Hyperliquid's weekend oil trading during Iran tensions reached MC's traditional finance contacts who don't typically discuss crypto, demonstrating mainstream attention to 24/7 markets

Real-world assets like gold, crude oil, silver, and copper now represent almost 30% of Hyperliquid volume on certain days, with significant weekend spikes during geopolitical events

Serious global trading firms are already using Hyperliquid, but barriers remain around user experience and policy uncertainty for broader institutional adoption

US Regulatory Barriers Block Hyperliquid Access

"It's not lawful in the United States to trade derivatives off exchange in a DeFi protocol like Hyperliquid" due to the Commodity Exchange Act requiring centralized exchange registration - Jake

The CFTC has statutory authority to solve this but hasn't acted yet, requiring new rules for on-chain markets that address the same risks as traditional designated contract markets

Opening US access requires exemptive relief packages from both CFTC for commodity perps and SEC for equity perps, addressing different regulatory frameworks for each asset class

Why Perpetuals Beat Traditional Derivatives

"Perps are a fundamentally better derivative than futures and options for basically all ordinary traders" because they perfectly track underlying assets without complex pricing or expiration management - Jake

Traditional futures require rolling as they expire and options involve complex Greeks pricing, while perps maintain simple economic exposure with optional leverage

DeFi infrastructure improves cost, speed, and resilience by eliminating intermediary fees and counterparty risk compared to traditional centralized systems

USDH Wins Community Governance in Competitive Process

Native Markets won the USDH ticker through "decentralized governance in its best form" reminiscent of early DeFi summer, with MC running a week-long campaign meeting validators and token holders

USDH shares half its yield to buy back HYPE tokens, creating economic alignment with the ecosystem unlike other stablecoins on Hyperliquid

Seven of 12 HIP3 markets chose USDH as their margin asset, with the stablecoin reaching 90 million TVL through organic growth

Stablecoin Compliance Without US Entity Structure

USDH follows the same compliance model as USDC - issued by BRIDGE with money transmitter licenses and OCC approval, reserves managed by BlackRock and Superstate

"There is no obligation in US law currently for a stablecoin issuer to identify the holder of a stablecoin other than at the point of minting or redeeming" - Jake

Stablecoin issuers have obligations for full backing, proper reserve management, and sanctions compliance freezing, but don't need to surveil wallet holders without warrants

Market Structure Legislation Risks and Priorities

"It is better for us to have no market structure bill than a bad bill that makes the situation worse" - Jake emphasizes protecting DeFi developers from money transmitter misclassification

The main risk of expanding agency authority through legislation is enabling future hostile administrations to target DeFi developers like Roman Storm for building non-custodial software

SEC's Project Crypto focuses on moving financial markets on-chain through token taxonomy safe harbors and tokenized securities exemptive relief