Laura Shin hosts Walt Lucan, President and CEO of the Futures Industry Association, and Chris Perkins, CEO of 250 Digital Asset Management, to discuss whether offshore crypto venues like Hyperliquid can find accommodation with U.S. regulations.

The conversation was sparked by CME Group and Intercontinental Exchange asking the CFTC to oversee Hyperliquid, with Chris arguing these incumbents are worried about Hyperliquid's superior price discovery and 24/7 capabilities.

Walt brings nearly 70 years of FIA experience representing the global derivatives industry, while Chris draws from his background running derivatives businesses at Lehman Brothers and Citigroup, plus serving on FIA's board.

The discussion explores three potential paths: Hyperliquid staying offshore, coming fully onshore with proper licenses, or further decentralizing to operate as pure technology rather than a regulated entity.

The Regulatory Crossroads Facing Offshore Crypto Venues

Chris frames the current situation as similar to post-Lehman crisis: "Markets got in front of regulation after the crisis, regulation had to catch up, but now we're in this position where markets are now out in front and regulation hasn't caught up."

Walt explains that new markets typically "seek out regulation because regulation brings credibility and confidence" as they mature, citing the post-2008 OTC derivatives evolution.

The core issue is that Hyperliquid currently blocks U.S. persons but may have "back doorways" which "is not legal" according to Walt.

Three Pathways Forward for Hyperliquid

Option 1: Come onshore and obtain three required U.S. licenses - DCM (exchange), DCO (clearinghouse), and FCM (intermediary) - though some could be consolidated.

Option 2: Stay offshore and maintain current status, keeping out U.S. persons while serving global markets with 24/7 capabilities.

Option 3: Further decentralize into "just code and tech" where "anyone in the world who has access to the internet" can access the technology.

Chris advocates the decentralized approach as "the most innovative, the most interesting, and definitely the most challenged" but notes regulators want "a throat to choke."

The 24/7 Trading Revolution and Infrastructure Gaps

Chris declares "24/7 markets are table stakes" because "when Trump invades Venezuela on a Friday night, gosh, I need to go and mitigate my risk."

Walt acknowledges the move toward 24/7 but warns about infrastructure gaps: "payment rails aren't open, banking system's not open, so the de-risking of the system can't happen."

FIA published a paper advocating for tokenization and 24/7 clearing systems before rushing to 24/7 trading to protect commercial hedgers.

Chris counters that solutions already exist: "we have stable coins that pay 24-7, money market funds that you can move 24-7 from a margin perspective."

CFTC's Principles-Based Regulatory Approach

Walt emphasizes CFTC's principles-based regulation: "thou shalt not manipulate markets, thou shalt not steal from customers, thou shalt uphold the financial integrity of the marketplace."

Chair Behnam stated the goal is "always going to be to onshore those markets and to have the market subject to our regulations here in the U.S."

The Clarity Act includes DeFi language inviting CFTC and SEC rulemaking on decentralized platforms "without necessarily a logical accountability structure."

Chris believes decentralized technologies can deliver on 2009 G20 principles (reporting, central clearing, electronic execution) that previously required centralization due to lack of blockchain technology.

Hyperliquid's Transparency Defense Against Manipulation Claims

Hyperliquid Policy Center argues their platform "offers enhanced market transparency, publishing a complete on-chain record of every transaction in real time."

They claim this creates "a uniquely hostile environment for insider trading or price manipulation" while facilitating "surveillance, detection, and investigation by regulators."

Walt acknowledges blockchain transparency benefits but notes missing "know-your-customer protections" and "AML protections that help with money laundering."

The platform's 24/7 trading "eliminates gaps and discontinuities between legacy market hours, improving price discovery for all participants."

Prediction Markets Face Similar Regulatory Challenges

Walt notes CFTC approved prediction markets as early as 2004 with Hedge Street and gave no-action letters for Iowa political markets with small dollar amounts.

Polymarket demonstrates that prediction markets "are incredibly predictive, the wisdom of crowds brings a lot of information to market in an incredibly accurate way."

Key challenges include preventing insider trading and ensuring self-certified products "are indeed not susceptible to manipulation."

Chris emphasizes that "market manipulation for derivatives has always been illegal" regardless of new technology, and "DOJ has a very long reach."

Resources Mentioned

May 21 The Day Things Land (On This Day...)

24-7 and compete? No, it's a great point. And I think the world is moving to 24-7. FIA just did a paper on this. But there are some structural things that have to happen in order for the integrity