The founder of Hyperliquid, Jeff Yan, is stepping into the regulatory spotlight with a clear message: regulate the companies running on top of blockchain networks, not the networks themselves. His comments come at a time when US regulators are still figuring out how to handle the fast-moving world of decentralized finance (DeFi).
Why Hyperliquid’s Founder Wants Targeted Crypto Regulation
Jeff Yan believes that blockchain infrastructure, like Hyperliquid, should remain free from direct regulatory oversight. Instead, he argues that regulators should focus on the centralized platforms and businesses that build on top of these networks and interact directly with everyday users.
Think of it like the early days of the internet. The underlying technology (the internet protocol itself) wasn’t regulated, but companies providing services over the internet were. Yan is essentially asking for a similar approach to crypto: the roads should be open, but the taxi companies operating on them should follow the rules.
This position matters because Hyperliquid is one of the most popular decentralized exchanges (DEXs) in the crypto space. A DEX is a platform where users can trade digital assets directly with each other, without a traditional intermediary like a bank or broker. As decentralized finance grows, regulators worldwide are debating how to apply rules designed for banks and exchanges to these borderless, automated systems.
What Hyperliquid Actually Does
Before diving deeper into the regulation debate, it helps to understand what Hyperliquid is. At its core, Hyperliquid is a layer-1 blockchain built specifically for high-speed trading. A layer-1 blockchain is the base-level network that processes and finalizes transactions on its own, without relying on another network.
Hyperliquid runs its own decentralized exchange that supports perpetual futures contracts. These are a type of derivative, meaning a financial product that lets traders bet on the future price of an asset without actually owning it. Perpetual futures have no expiry date, which makes them popular among active crypto traders.
The platform has gained significant traction because it offers fast transaction speeds and low fees compared to many competitors. It’s become a go-to destination for users looking to trade without going through a traditional exchange. If you’re active in crypto trading, you might already use a trusted exchange like Kraken or Bitvavo for spot trades, while Hyperliquid handles more advanced strategies.
The Bigger Picture: DeFi Regulation in the United States
The conversation around DeFi regulation in the United States is still very much unresolved. Agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been going back and forth on how to classify digital assets and who should oversee them.
Yan’s argument aligns with what many in the crypto industry have been saying for years. They believe that regulating the open-source code that powers blockchains is impractical and could drive innovation overseas. Others argue that without any oversight, users are exposed to fraud, market manipulation, and systemic risk.
There is real-world precedent for this kind of debate. In Europe, the Markets in Crypto-Assets Regulation (MiCA) framework took effect in 2024, setting rules for crypto service providers while leaving the underlying technology untouched. Yan’s vision is similar: let the technology stay open and neutral, but hold companies accountable.
Why This Matters for Everyday Crypto Users
You might be wondering how a regulatory debate between founders and government agencies affects you. The answer is simple: it shapes what tools you have access to and how safe they are.
If regulators decide to treat blockchain networks themselves as regulated entities, it could limit who can build DeFi applications and where. This could reduce the number of platforms available, increase costs, or even push projects out of the US entirely. On the other hand, if platforms operating on these networks are required to follow anti-money laundering (AML) and know-your-customer (KYC) rules, users could benefit from greater transparency and protection.
For now, if you’re actively trading or holding crypto, it’s smart to take your own security seriously. Hardware wallets like Ledger give you full control over your private keys, which are the secret codes that prove you own your crypto and let you move it. Storing your assets on an exchange is convenient, but self-custody is the gold standard for safety.
What’s Next for Hyperliquid and DeFi Regulation
Jeff Yan’s public stance on regulation is notable because most crypto founders prefer to stay quiet on policy matters. By speaking up, he’s putting pressure on US regulators to take a thoughtful approach to DeFi.
Industry watchers expect more clarity to come throughout 2025 and 2026 as new administrations and regulatory frameworks take shape. The outcome of this debate will influence not just Hyperliquid but every decentralized protocol operating in or serving US customers.
The Bottom Line
Hyperliquid’s founder is making a pragmatic argument: regulate the businesses, not the technology. It’s a stance that balances innovation with accountability, and it reflects the kind of nuanced thinking the crypto industry needs right now. As the regulatory landscape continues to evolve, users should stay informed, choose reputable platforms for trading, and always keep their holdings secured with tools they control.
