Hyperliquid Policy Center Calls for Joint SEC-CFTC Oversight of Perpetual Futures

The Hyperliquid Policy Center has formally urged the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to develop a joint regulatory framework for perpetual futures, according to a paper released today and reported by The Block. The proposal centers on classifying these derivative contracts based on their economic structure rather than the underlying asset, such as Bitcoin, crude oil, or equities.

Why This Matters for the Crypto Derivatives Market

Perpetual futures—often called “perps”—are a cornerstone of digital asset trading, allowing investors to speculate on price movements without an expiry date. The market has grown rapidly, with daily volumes frequently exceeding billions of dollars on global exchanges. However, regulatory clarity in the United States remains fragmented, with the SEC and CFTC each claiming jurisdiction over different aspects of digital assets, creating uncertainty for exchanges and traders.

The Hyperliquid Policy Center’s paper argues that the current asset-based classification is outdated. For instance, a perpetual future tracking Bitcoin might fall under CFTC oversight if deemed a commodity, while one tracking a tokenized stock could be considered a security under SEC rules. This patchwork approach, the paper contends, creates inefficiencies and pushes trading activity to offshore platforms that operate in clearer legal environments.

Economic Structure as a Regulatory Compass

The proposal suggests that regulators should look at the contract’s mechanics—such as margin requirements, settlement procedures, and leverage—rather than the asset it references. This approach would align with how traditional derivatives are regulated, where the focus is on the contract itself, not just the underlying commodity or financial instrument.

By adopting a unified framework, the Hyperliquid Policy Center argues that the U.S. could attract a significant portion of the perpetuals market back onshore. This would not only enhance investor protections but also bring greater transparency to a sector that has faced criticism for opaque practices and insufficient oversight.

Industry and Legal Implications

The call for joint oversight is not new, but it comes at a time when both agencies are under pressure to clarify their roles in the digital asset space. Recent legislative efforts, such as the Lummis-Gillibrand Responsible Financial Innovation Act, have proposed splitting jurisdiction between the SEC and CFTC, but progress has been slow. The Hyperliquid Policy Center’s paper adds to a growing chorus of industry voices seeking a more coherent regulatory environment.

For traders and exchanges, the outcome of this debate will have significant implications. A clear, unified framework could reduce compliance costs and legal risks, potentially making the U.S. a more attractive hub for crypto derivatives. Conversely, continued fragmentation may keep the market offshore, limiting domestic innovation and investor access.

Conclusion

The Hyperliquid Policy Center’s recommendation to classify perpetual futures by economic structure rather than underlying asset offers a pragmatic path forward. As the SEC and CFTC deliberate their next steps, the industry will be watching closely. The proposal underscores a broader need for regulatory adaptation to the realities of modern digital finance, balancing innovation with investor protection.

FAQs

Q1: What are perpetual futures?
Perpetual futures are derivative contracts that allow traders to speculate on the price of an asset without an expiry date. They use a funding rate to keep the contract price aligned with the spot market.

Q2: Why are the SEC and CFTC both involved?
The SEC regulates securities, while the CFTC oversees commodities and derivatives. Digital assets can be classified as either, depending on their characteristics, leading to overlapping or ambiguous jurisdiction.

Q3: How would a joint framework benefit traders?
A unified regulatory approach would provide clearer rules, reduce compliance burdens, and potentially bring more trading activity back to U.S. exchanges, offering greater legal certainty and investor protections.