The Hyperliquid Policy Council (HPC) has formally requested that the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) establish a clear and consistent regulatory framework for perpetual contracts, specifically focusing on equity perpetuals.
Rather than questioning the existence of perpetual contracts, the HPC is seeking legal clarity on how these derivative products should be classified and regulated. Perpetual contracts provide traders with asset exposure without ownership and lack the fixed expiration dates found in traditional futures contracts.
The Distinction Between Futures and Swaps
The central regulatory question centers on whether a perpetual contract legally qualifies as a future or a swap. This classification is vital because futures and swaps are regulated under different regimes. Generally, futures fall under the purview of the CFTC, whereas swaps can fall under the SEC.
The HPC noted that products straddling the jurisdictional boundaries of the CFTC and the SEC have raised classification questions for decades. These historical examples include novel options, index participations, Dow Jones index futures, and volatility index futures.
Arguments for Classification
While traditional futures eventually expire and perpetuals do not, the HPC contends that this structural difference alone should not prevent perpetuals from being categorized as futures. The council points out that a perpetual contract's funding mechanism maintains price alignment with the underlying asset, functioning similarly to how expiration promotes price convergence in traditional futures markets.
The HPC suggests that the SEC and CFTC can deliver this necessary clarity through interpretive guidance, policy statements, and staff actions under current law, avoiding the need to wait for congressional action. A harmonized taxonomy, the council argues, would allow exchanges to compete based on execution quality and liquidity rather than regulatory ambiguity.
Ecosystem Growth and Market Activity
This regulatory push coincides with notable growth across the Hyperliquid ecosystem. Over a ten-month period, demand for HIP-3 perpetual volume reached $480 billion, spanning commodities, currencies, indexes, and stocks. Additionally, HyperEVM—the Ethereum-compatible smart-contract environment within the ecosystem—recently reached a new all-time high in weekly revenue, exceeding $1 million.
