Hyperliquid, a crypto platform, has spurred interest from traditional markets, prompting discussions and scrutiny of its 24/7 trading model. Regulators are now being asked whether U.S. exchanges can offer similar perpetual futures under clear guidelines.
ICE’s Interest in Hyperliquid
According to Jeffrey Sprecher, founder, chairman, and CEO of Intercontinental Exchange (ICE), the company is engaging with Hyperliquid to understand its operations. Sprecher made these remarks during a fireside chat at Bernstein’s 42nd Annual Strategic Decisions Conference on Wednesday.
“We’re not freaked out about it,” Sprecher said, referring to Hyperliquid. “We’re actually talking to these people and learning about it. They’re learning what we’re doing. We’re helping them understand our world. They’re helping us understand their world.”
Hyperliquid allows traders to bet on price movements around the clock, outside of the traditional Wall Street system. Perpetual futures, or “perps,” are contracts that enable traders to speculate on price direction without an expiration date.
Sprecher highlighted the question of whether regulated exchanges can offer products comparable to the perpetual futures already available on crypto platforms. ICE, which owns the New York Stock Exchange, has inquired with regulators about the restrictions preventing traditional venues from offering similar products.
“But what we are saying to the regulators is: Can we do that?” Sprecher said. “Like, why are you prohibiting us from doing this when it’s already happening? And can’t we have a level playing field?”
Regulatory Developments
The gap between traditional and crypto markets is already closing. On Friday, the Commodity Futures Trading Commission (CFTC) issued an order allowing Kalshi to offer Bitcoin perpetual futures, a move that brings part of the market Sprecher described closer to regulated U.S. venues.
Coinbase, a publicly traded U.S. crypto exchange, also announced Friday that it can now connect U.S. institutional clients to global crypto options and perpetual futures liquidity through its CFTC-regulated futures business.
SpaceX as a Test Case
On Wednesday, Sprecher pointed to SpaceX, Elon Musk’s rocket and satellite company, as a near-term test of whether prices formed on crypto trading venues can influence a company’s public listing.
Market participants and regulators will be watching whether a derivative price linked to SpaceX, formed before the IPO, proves irrelevant or becomes a reference point for the listing, he added.
Traders are already using perpetual futures to bet on SpaceX’s expected listing price months before a potential IPO, with those contracts averaging nearly $18 million in daily volume over two weeks, according to Bloomberg.
Interest in SpaceX has also grown alongside reports that Musk has discussed folding the rocket firm together with Tesla, a move that could place more than $2.2 billion worth of Bitcoin under one corporate roof.
Ultan Miller, CEO of private markets infrastructure firm Hecto Finance, told Decrypt that such discussions suggest price discovery for companies such as SpaceX is “increasingly happening on crypto rails” before a bank syndicate files their IPO paperwork.
“Perpetuals are not the only tool in that shift, but they are an important signal of where marginal views on value are being expressed and hedged in real time,” Miller said. He added that regulators should focus on providing a “clear, technology neutral home onshore” for this activity to improve transparency in “notoriously opaque private markets.”
Wall Street’s Perspective
Fernando Lillo, marketing director at crypto trading platform Zoomex, told Decrypt that ICE’s talks with Hyperliquid demonstrate that Wall Street is taking on-chain derivatives more seriously.
Lillo noted that access to companies such as SpaceX before they go public has long been “a venture capitalists’ and institutional elites’ game.”
Traditional firms previously viewed crypto derivatives platforms as “unregulated shadow markets,” he said, but now, Hyperliquid highlights an “on-chain architecture validation” and “retail-driven pre-IPO markets.”
Sprecher is making a “pragmatic” case to regulators, Lillo said: “If the demand exists and the technology works, let us host it safely in a regulated environment before we lose the market entirely to offshore entities.”
The demand is already evident on crypto platforms. While the door to Bitcoin perps is open, products outside of it still require a “case-by-case” review process, the CFTC said.
