Hyperliquid’s expansion has hit a regulatory snag in the UK, where the Financial Conduct Authority (FCA) added the decentralized derivatives platform and its associated Hyper Foundation to its official warning list. The FCA suspects the firm may be conducting or promoting financial services on British soil without the necessary authorization.
In a notice dated May 21, the FCA urged consumers to steer clear, cautioning potential users to “avoid dealing with this firm and beware of scams.” The warning singled out the Hyper Foundation website, the Hyperliquid trading app, and the project’s social media channels as unauthorized entities under FCA scrutiny.
The FCA’s move highlights mounting concerns around consumer protection, particularly as Hyperliquid ventures beyond purely crypto markets and increasingly overlaps with traditional financial structures. Users in the UK who trade through Hyperliquid will not be eligible for recourse through the Financial Ombudsman Service nor enjoy protection under the Financial Services Compensation Scheme if they incur losses.
Hyperliquid operates as a non-custodial, decentralized exchange specializing in perpetual futures–derivatives that offer leveraged exposure without expiry. This model has propelled Hyperliquid to become a key player in offshore crypto derivatives, enabling traders to maintain open positions indefinitely while betting on price swings.
That business model clashes with the UK’s regulatory stance. The FCA banned the sale of crypto derivatives to retail consumers back in 2021 and implemented stricter rules on crypto financial promotions in 2023. Hyperliquid’s prominence amid these tighter controls underscores why the FCA is moving aggressively.
Kyle Samani, chairman of Solana-focused Forward Industries, framed the FCA warning as “the first of many.” He suggested stricter oversight will follow, especially as Hyperliquid’s growth draws traditional finance’s spotlight.
That spotlight is already glaring in the US, where market titans CME Group and Intercontinental Exchange recently flagged the platform to the Commodity Futures Trading Commission (CFTC). Their concerns focus on the risks that arise from a decentralized venue with limited Know Your Customer (KYC) protocols. They warned this could facilitate price manipulation, collusion on sensitive market data, or sanctions evasion–particularly with oil futures.
CME and ICE stressed that such activity could impact global oil benchmarks if geopolitical actors exploit Hyperliquid’s decentralized structure to bypass conventional oversight.
This regulatory pushback crystallizes the growing friction between decentralized finance and established markets. Hyperliquid’s rise tests regulatory boundaries at a critical junction where crypto derivatives intersect with traditional commodities trading.
Traders and observers should watch for further regulatory clarifications or enforcement actions in both the UK and US. The FCA’s latest warning is not the platform’s final hurdle. Industry insiders expect continued scrutiny as regulators weigh the risks of crypto derivatives platforms encroaching onto regulated turf.
UK regulator flags Hyperliquid as regulatory scrutiny tightens
The UK Financial Conduct Authority has warned that Hyperliquid may be providing financial services without authorization. This highlights growing regulatory scrutiny as the platform targets more traditional markets.