Hyperliquid founder Jeff Yan has proposed a new way for the United States to regulate decentralized finance (DeFi). Speaking on Bloomberg’s Odd Lots podcast, Yan said regulators, including the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), should focus on the companies that run digital trading platforms rather than the underlying Layer 1 blockchains.
Hyperliquid’s next big challenge isn’t just technology or trading volume. It’s regulation, and Jeff Yan has a clear vision for how it should work.
According to a report referencing Bloomberg’s Odd Lots podcast, the Hyperliquid founder argues that regulatory responsibilities should apply to financial institutions and businesses operating markets on the blockchain, rather than automatically treating the underlying network as a traditional exchange.
This distinction could be extremely important for Hyperliquid’s future.
Under this approach, Wall Street firms could potentially build regulated financial services using Hyperliquid’s infrastructure while taking responsibility for their own compliance obligations.
The bigger vision is to make Hyperliquid a financial infrastructure layer that traditional institutions can build on, rather than simply another cryptocurrency exchange.
I believe this is one of the most important long-term developments to watch for $HYPE . Institutional adoption could create significant opportunities, although regulatory acceptance is far from guaranteed.
Hyperliquid is positioning itself for a future where traditional finance and decentralized infrastructure operate together.
#Hyperliquid #HYPE #DeFi #Blockchain #WallStreet
— HypedLaunches (@HypedLaunches) October 15, 2026
He compared blockchains to internet infrastructure, saying companies offering financial services should follow the law. Yan wants Hyperliquid to provide fast trading technology to Wall Street firms, such as Goldman Sachs, JPMorgan Chase, and Morgan Stanley. He wants Hyperliquid to work like Amazon Web Services (AWS), which provides cloud computing and data storage for companies such as Netflix, Airbnb, and Spotify, rather than compete directly with established financial institutions.
READ ALSO: Hyperliquid Launches Manual Borrowing With $269M Already Borrowed
Ooki DAO shows how regulators can target a decentralized trading platform
Between 2019 and 2021, Tom Bean and Kyle Kistner built a trading protocol called bZeroX that allowed users to trade with borrowed money. They later handed control of the protocol to Ooki DAO, a group whose members used tokens to vote on decisions.
In September 2022, the US CFTC settled charges against bZeroX and its founders. It also sued Ooki DAO, arguing that the DAO’s voting members could be held responsible for the platform’s activities. In June 2023, a federal court ordered Ooki DAO to pay a $643,542 penalty, stop operating its trading platform, and shut down its website.
Social media user @Cahtx_official highlighted a key issue raised by the case: who should be held responsible when a decentralized platform breaks the law?
@WuBlockchain The distinction matters. Who runs the service and who controls the infrastructure aren’t always the same thing
— CahtX Official (@cahtx_official) October 15, 2026
@Raintures commented that regulators may want to hold businesses offering financial services responsible while allowing blockchain developers to continue building open software.
@WuBlockchain regulating the operators instead could let open blockchain infrastructure stay permissionless
— Rain (@raintures) October 15, 2026
@krypto_wurfel’s supported regulating companies that offer financial services but questioned where the commercial operator ends and the underlying blockchain begins. Unlike a traditional exchange with a clearly identified company in charge, a decentralized trading platform can involve several parties, including developers, validators, and those responsible for the trading interface. Regulators must determine which parties actually control the service before deciding who should be held responsible.
@WuBlockchain Regulate the storefront, not the road. Fair. But on Hyperliquid, where does the operator end and the chain begin? 🤔
— Wurfel.nochill 🔺💎🔺⚔️ (@krypto_wurfel) October 15, 2026
What Yan’s proposal could mean for blockchain developers and DeFi projects
If US regulators adopt Yan’s proposal, blockchain developers could have more freedom to build and publish software without automatically facing the same legal obligations as companies offering financial services through that software.
The proposal could also change how blockchain projects make money. Developers might have more opportunities to supply technology to regulated exchanges, investment firms, and other financial institutions. Rather than relying only on token sales or fees from individual users, projects could earn revenue by providing trading infrastructure, software, or technical services to established businesses.
Meanwhile, Hyperliquid said a future network upgrade will add optional permissioned market functionality, known as HIP-3*, to its HIP-3 system. The feature will allow market deployers and sub-deployers to manage on-chain whitelists that limit who can trade in selected markets.
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