FCA lists Hyperliquid as unauthorized; flags perpetual futures

The Financial Conduct Authority on May 21 listed Hyperliquid and Hyper Foundation as unauthorized and warned UK users to avoid dealing with the platform. The notice said the protocol’s app and its social channels may be offering or promoting financial services in the UK without permission.

Hyperliquid operates a decentralized market for perpetual futures, contracts that have no fixed expiry and rely on regular funding payments to keep futures prices aligned with spot markets. By May 20 the platform had generated about $255 million in year-to-date revenue and its native HYPE token had risen roughly 101% over the same period.

The FCA’s notice flagged concerns about firms offering or promoting regulated financial services in the UK without authorization and raised questions about how offshore venues should be treated when they handle large trading volumes that can influence global prices.

U.S. regulators have approved some perpetual-style products under formal orders. The Commodity Futures Trading Commission issued an order allowing a prediction market platform to offer Bitcoin perpetual futures in the U.S., and earlier permitted another platform to list a long-dated product limited to a 25-year term.

Terry Duffy, chief executive of CME Group, warned that crypto perpetual futures could be “a disaster waiting to happen,” criticizing the regulatory process that allowed some of these instruments to enter regulated markets and calling the market “supplanted by the speculation market.”

Jeffrey Sprecher, founder and CEO of Intercontinental Exchange, said ICE is studying Hyperliquid’s 24/7 trading model and has asked regulators whether traditional exchanges could offer similar products under clear rules. “We’re not freaked out about it,” he added.

Market participants point to liquidation mechanisms, margin requirements and market surveillance as key tests for perpetuals. Matthew Pinnock, chief operating officer at Altura DeFi, said perpetual futures have become a dominant way to express directional views on digital assets and that volumes on venues such as Hyperliquid make them hard for traditional market participants to treat as peripheral.

Perpetual futures allow positions to remain open indefinitely and use funding payments between long and short holders to tether futures to spot prices. If funding mechanisms, margin calls or liquidation engines fail during extreme volatility, positions can suffer large losses or trigger cascade liquidations that affect other venues.

Exchanges and market infrastructure firms are assessing how to adapt trading hours, risk controls and product design in response to growing perpetual futures activity. Regulators and industry participants say the coming months will test whether current rules and systems can manage continuous trading and the leverage these products allow.