The U.S. derivatives regulator has officially greenlit "perpetual swaps," bringing this high-leverage instrument, which previously operated in a regulatory gray area, into the traditional market system. On Friday, May 29, the U.S. Commodity Futures Trading Commission (CFTC) announced approval for the listing and trading of perpetual swaps linked to the spot price of Bitcoin, stating it would review applications for contracts tied to other assets on a case-by-case basis. This move comes amid pressure from the explosive growth of the decentralized exchange Hyperliquid. The Singapore-based platform has amassed a large user base and significant trading volume in an unregulated environment. Prediction market operator Kalshi and cryptocurrency exchange Coinbase promptly announced they had received CFTC approval and would "soon" launch regulated perpetual swap products in the U.S. This regulatory shift is expected to further popularize the use of these extremely high-risk, high-leverage contracts in the U.S. market. Perpetual contracts typically allow traders to speculate on the price movements of various assets with leverage as high as 40x.
What are Perpetual Swaps?
A perpetual swap is a derivative with no expiration date, allowing traders to make directional bets on an asset's price without the need for physical settlement. The core appeal of this contract type lies in its operational simplicity and its capacity to significantly amplify leverage, thereby offering the potential for higher returns. The decentralized exchange Hyperliquid allows users to speculate on the prices of cryptocurrencies, oil, traditional stocks, and even private, non-listed companies, with leverage of up to 40x. Neil McDonald, CEO of Moomoo US, described its user base as a "24/7 crypto trading community looking for volatility," stating:
People are seeking significant price swings.
According to CoinDesk Data, since its launch in 2023, WTI and Brent crude oil contracts have accounted for nearly half of Hyperliquid's total trading volume. Silver futures and Nasdaq 100 index futures follow closely behind. This structure indicates that during recent periods of market volatility, user demand for speculating on real-world assets, not just crypto tokens, has also been robust.
Iran Conflict Serves as Catalyst
Hyperliquid was relatively unknown outside crypto circles until the outbreak of the Iran conflict, which dramatically altered the landscape. As energy markets experienced severe turbulence, a large number of traders rushed to place bets on energy prices after weekday trading hours closed and during weekends. Consequently, trading volume for Hyperliquid's oil-linked contracts surged dramatically. Patrick Moley, Senior Research Analyst at Piper Sandler, noted:
The weekend trading at the onset of the Iran conflict clearly exposed a structural gap in traditional markets.
This surge proved highly profitable for Hyperliquid. The platform's revenue for 2025 reached approximately $960 million, despite having a total staff, including founder Jeff Yan, of fewer than 15 people. Jeff Yan previously worked at the high-frequency trading firm Hudson River Trading. Hyperliquid's native token, HYPE, has accumulated gains of nearly 70% over the past year, standing in stark contrast to mainstream cryptocurrencies that have struggled to recover since a sharp decline last October.
Regulatory Gaps and User Circumvention
As a decentralized platform, Hyperliquid does not comply with mainstream "Know Your Customer" (KYC) and anti-money laundering (AML) regulatory requirements. Legally, it is also not permitted to allow U.S.-based users to access its exchange. However, regulatory barriers have not truly blocked users. Similar to platforms like the offshore prediction market Polymarket, numerous U.S. users easily bypass geographic restrictions using tools like VPNs to mask their location and continue trading as usual. Hyperliquid's rapid growth has drawn significant attention from traditional exchanges and regulators. Paul Howard, Senior Director at crypto market maker Wincent, stated that Hyperliquid is "one of the biggest challengers to the entire infrastructure system," adding that "investor protection is lower there, and for some, that's precisely the appeal."
Traditional Giants Accelerate Entry
Facing the rise of the perpetual swap market, traditional exchanges are speeding up their efforts to catch up.
Last week,
This is a wake-up call for the entire industry. While most of these offshore exchanges are unregulated foreign entities where our clients can't even trade... everyone is paying close attention.
OKX Chief Marketing Officer Haider Rafique stated:
For traditional institutions burdened with heavy compliance, it's perfectly logical that when a small company carves out a space with guerrilla tactics, we say we'll offer a regulated version.
He also issued a warning:
If something goes wrong at Hyperliquid, the impact would ripple across the entire industry and even Wall Street. In the event of extreme volatility or a settlement failure, billions of dollars in losses could occur in an instant—that's the obvious risk.
Hyperliquid: We Are the "Superior Product"
Facing competitive pressure from all sides, Hyperliquid is not backing down. In February of this year, the company invested $29 million to establish a policy center, hiring a team of lobbyists to actively advocate for its policy goals in Washington, D.C. Bob Diamond, former CEO of Barclays and now Chairman of Hyperliquid Strategies (a public company investing in the HYPE token), dismissed traditional exchanges' concerns as "unfounded," stating:
Perpetual swaps are a superior product for non-professional investors, so of course these traditional venues are trying desperately to protect their market share.
Regarding external skepticism about potential price manipulation on Hyperliquid, he dismissed it outright as "nonsense." Diamond revealed he is optimistic about the progress of recent meetings in Washington between the company, its allies, regulators, and politicians. Founder Jeff Yan also posted on platform X earlier this month, expressing hope to "work to make legal U.S. user access to Hyperliquid a reality."
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