Hyperliquid Policy Center Urges EU to Regulate Perpetual Futures as Derivatives

Hyperliquid Policy Center has urged European regulators to keep perpetual futures under existing derivatives rules. The group wants product features, rather than blockchain technology, to determine their regulatory treatment.

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HPC Backs MiFID II Rules for Perpetual Futures

Hyperliquid Policy Center submitted its position during the European Commission’s review of the Markets in Crypto-Assets Regulation. HPC argued that financial instruments on public blockchains should not be excluded from MiFID II.

The group stated that the use of blockchain should not be the sole criterion for triggering MiCA for a financial product. Existing European Securities and Markets Authority guidelines already consider economic features when classifying financial instruments.

HPC applied the same argument to perpetual futures, which have no fixed expiration date. The group has stated these contracts have key characteristics with other derivatives regulated under MiFID II.

HPC is seeking confirmation of this treatment via existing ESMA guidelines. This would prevent the establishment of a new separate regulatory category for crypto-linked perpetual contracts, the group said.

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Public Blockchains Could Support Regulatory Records

HPC also requested the regulators to consider public blockchain records to fulfil existing transparency requirements. Trades, funding payments, orders and liquidations are recorded on the public networks for independent verification.

MiFID II requires firms to maintain records and provide information about trading activity. HPC stated that regulators might consider using verifiable onchain information when considering compliance with those requirements.

The group also desires that the rules should accurately reflect the actual role of each participant and the risks involved. HPC suggested that rates of funding, margin rules, reference prices and position closing rules should be disclosed.

HPC argued that perpetual futures are not contracts for difference, or CFDs. Perpetuals are usually traded on order books, while CFD providers can deal directly with customers as counterparties.

Hyperliquid Expands Its Onchain Market Infrastructure

The policy submission coincides with Hyperliquid growing its trading infrastructure. Manual borrowing went live on September 18, enabling users to borrow USDC and USDT using supported collateral.

Total borrowing has since reached $269 million. The feature uses the same HyperCore infrastructure that supports Hyperliquid’s portfolio margin system and other onchain trading functions.

Hyperliquid has also added HIP-3 functionality for permissioned markets. Deployment teams can manage onchain allowlists, which deployers or designated sub-deployers can use to control access to the market.

HPC also asked European regulators to preserve access to global liquidity. Its submission called for existing financial rules to govern regulated products regardless of the blockchain used.

For more options in self-custodial markets, traders can compare top-tier venues in our guide to the best crypto futures trading platforms.