Hyperliquid Policy Center pushes SEC, CFTC for equity perps framework

Hyperliquid Policy Center has asked the SEC and CFTC to let qualifying equity perpetual contracts enter the U.S. as security futures after HIP-3 markets processed more than $480 billion in notional trading volume over their first 10 months.

Hyperliquid Policy Center said in an Aug. 24 comment letter that cash-settled equity perpetuals carrying the established characteristics of futures contracts should be eligible for classification as security futures, a category jointly overseen by the two U.S. regulators.

For a product trading hundreds of billions in volume, perpetual contracts still don't have a settled answer to the most basic question under U.S. law: are they futures, or are they swaps?

One federal judge described the exercise as deciding "whether tetrahedrons belong in… https://t.co/YjpwaV4fwh pic.twitter.com/dOcZtu1Ujq

— Hyperliquid Research Collective (HRC) (@HyperliquidR) August 24, 2026

The filing responds to a joint request for comment from the Securities and Exchange Commission and Commodity Futures Trading Commission on how U.S. law should define swaps, security-based swaps and products that may fall outside those categories. HPC described the issue as a basic classification question that has remained unsettled even as perpetual contracts have expanded outside the United States.

Under HPC’s proposal, regulators would first look at the structure of a derivative and how it trades to decide whether it is a future or a swap. The asset referenced by the contract would then determine how regulatory authority is divided between the SEC and CFTC.

A perpetual contract on Bitcoin, crude oil or an individual stock should therefore receive the same initial product classification when each instrument has the same futures-like characteristics, the group argued. A contract tied to a single stock that qualifies as a future would fall into the security futures category and come under both agencies.

Hyperliquid group says equity perpetuals can qualify as security futures

At the center of HPC’s position is the structure of a perpetual contract, which has no predetermined expiration date but uses recurring funding payments to keep its price close to the asset it tracks.

When a contract trades above its reference price, long-position holders pay shorts. If the contract falls below the reference price, shorts pay longs. HPC said the mechanism creates a continuous incentive for the perpetual price to converge toward the underlying market, performing a function that expiration and final settlement serve in traditional dated futures.

HPC also cited features that courts and regulators have historically used when examining futures contracts, including standardized terms, fungibility, fixed unit quantities and the ability to close a position through an offsetting trade.

On Hyperliquid’s HIP-3 markets, positions open and close through a central limit order book, margin is maintained continuously, and contract prices are publicly available. Equity perpetual holders receive price exposure but do not obtain ownership, voting rights, or other claims attached to the referenced shares.

The lack of an expiry date does not automatically prevent futures classification, according to the filing. HPC cited federal court decisions finding that a specified future delivery or settlement date is not always required and that contracts of indefinite duration can still carry the futurity associated with a futures contract.

U.S. regulators have already applied that reasoning to crypto perpetuals. In May, crypto.news previously reported that the CFTC approved Kalshi’s Bitcoin perp as the first federally regulated Bitcoin perpetual futures contract in the United States. The May 29 approval classified BTCPERP as a futures contract even though it has no fixed expiration date.

Kalshi began offering the contract in June and subsequently expanded its regulated perpetual lineup to other cryptocurrencies. The CFTC said additional products would remain subject to review, leaving the treatment of contracts referencing other asset classes open to further regulatory analysis.

SEC and CFTC have yet to settle the classification question

Past enforcement cases have not produced a uniform answer for perpetual contracts.

HPC said earlier CFTC actions treated some perpetual products as swaps after examining parts of the Commodity Exchange Act’s swap definition without determining whether the instruments qualified for the statutory exclusion covering futures contracts. Other cases treated perpetual-style products as leveraged or margined retail commodity transactions subject to trading requirements similar to those applied to futures.

The SEC also used the term “perpetual futures” in its case related to the Mango Markets exploit while disputing that the products were futures contracts offered under regulated futures rules. According to HPC, neither an enforcement action nor a court had resolved the threshold question of whether the instruments themselves qualify as futures or security futures excluded from the swap definition.

The CFTC took a different approach with Kalshi in May, approving BTCPERP as a “contract for sale of a commodity for future delivery.” Its accompanying policy statement said perpetual contracts on other asset classes should undergo review and specifically identified equity-based products as an area where the CFTC and SEC should both be involved.

Disagreement over that interpretation has already reached federal court. CME Group later filed a legal challenge over perps, arguing that products such as Kalshi’s contract should fall under the swaps framework instead of being treated as ordinary futures. CME’s position contests the legal basis the CFTC used when approving the contracts.

Around the same period, the SEC and CFTC opened the definitions review that prompted HPC’s latest submission. The agencies sought public input on swaps, security-based swaps, exclusions from those definitions and emerging derivatives, including products that raise questions about the boundary between their jurisdictions.

HIP-3 volume puts $480 billion behind the regulatory debate

HPC tied its request to trading activity already taking place through Hyperliquid’s HIP-3 framework, where independent market operators known as deployers can create their own perpetual markets.

The protocol handles execution, price-time order matching, enforcement of margin requirements, funding transfers, clearing and settlement. Deployers control elements including the assets listed, contract specifications, oracle sources, leverage limits and open-interest caps.

HIP-3 markets now cover several traditional asset classes for users outside the United States, including crude oil, gold and other precious metals, foreign exchange, equity indexes, individual equities and exchange-traded funds.

Over the 10 months following HIP-3’s launch, those markets accumulated more than $480 billion in notional trading volume and maintained roughly $4 billion in open interest, according to the filing. Across Hyperliquid as a whole, markets processed nearly $3 trillion in notional volume during 2025 and more than $1.5 trillion during 2026 through Aug. 23.

Stock-linked products have become part of that expansion. A July examination of Hyperliquid equity perps detailed how the platform has hosted perpetual contracts tracking equities while giving traders synthetic price exposure without ownership of the underlying shares.

HPC said U.S. users currently cannot access Hyperliquid, meaning the liquidity and infrastructure described in its filing developed outside the country while regulated domestic access to perpetual contracts remained limited.

Security futures would put equity perps under both regulators

HPC proposed using the existing security futures framework for equity perpetuals that meet futures characteristics because the category already assigns oversight to both agencies.

Under the framework, a designated contract market regulated by the CFTC can list security futures after notice-registering with the SEC. A national securities exchange can cross in the other direction by notice-registering with the CFTC, while intermediaries have parallel registration routes.

Security futures have seen limited commercial activity since OneChicago closed in 2020, but the filing noted renewed interest this year. CME Group announced in June that it would launch single-stock futures beginning July 27, returning U.S. exchange activity to a product category that had been largely dormant.

HPC asked the agencies to confirm that cash-settled equity perpetuals carrying established futures characteristics may be listed as security futures, while allowing exchanges to retain flexibility when deciding how individual products should be classified.

The group also requested a consistent taxonomy between the two regulators and asked them to update the security futures framework so existing listing standards can accommodate new contract structures. HPC said classification should remain flexible enough for a bilateral, individually negotiated perpetual-style product to be treated as a swap or security-based swap when it lacks the fungibility, offset rights and multilateral execution associated with futures.

According to the filing, the SEC and CFTC could issue interpretive guidance, policy statements or staff-level guidance without waiting for a formal rulemaking. The agencies also have joint authority to modify security futures listing standards, which they previously used for American Depositary Receipts, ETFs, closed-end fund shares and debt securities.