Hyperliquid’s Yan and CME’s Duffy Split Over Who Must Bear US Compliance

Hyperliquid founder Jeff Yan’s proposal to place regulatory obligations on firms operating markets on its blockchain has drawn an objection from CME Group Chairman and CEO Terry Duffy, exposing a central dispute over how the platform could serve U.S. traders.

“The regulation sits at the layer where there are controls. And indeed, the deployers are the ones that exercise these controls,” Yan said in an Oct. 15 interview on Bloomberg’s Odd Lots podcast. Duffy subsequently argued on the same program that an institution cannot leave market oversight to its users: “You have an obligation to to make certain that you’re policing these markets as an institution, not just as the user.”

For U.S.-based traders, the debate has not changed the published access restrictions. Hyperliquid’s terms of use prohibit people located in or residing in the United States from using its website interface and explicitly ban using VPNs or proxies to conceal a restricted location.

Yan, the co-founder and CEO of Hyperliquid Labs, described a division between the blockchain’s infrastructure and the businesses deploying trading markets on it. In the original interview, he compared the network to internet protocols that support financial applications without themselves being regulated as those applications.

He said deployers specify contracts and supply oracle prices — data that tracks an asset’s price outside the blockchain — while inheriting the network’s order-book and clearing technology. A regulated entity could therefore operate markets using the blockchain, he argued, without making the underlying network a traditional exchange.

Duffy’s subsequent Odd Lots interview challenged that distinction. The head of the derivatives exchange operator cited know-your-customer checks, leverage and automatic liquidations, arguing that highly leveraged positions could produce cascading liquidations. Those were Duffy’s objections to the model, not findings announced by a regulator.

VPN Access Is Still Barred

Yan also rejected the suggestion that Americans could legitimately bypass restrictions. “Well, again, if you’re an American using a VPN, you’re breaking the terms of the service,” he said.

The published terms govern the website-hosted interface at app.hyperliquid.xyz, which Hyperliquid Corp. provides. They distinguish that interface from the permissionless blockchain and say the website is not the exclusive means of accessing the network. The U.S. restriction covers people and entities residing in, located in, incorporated in or maintaining a registered office in the country; it is not worded simply as a citizenship ban.

The discussion follows President Donald Trump’s August statement that the Commodity Futures Trading Commission was working to bring Hyperliquid into the country “in a fully compliant and legal fashion,” as The Defiant previously reported.

Asked what would enable U.S. access, Yan described the unresolved question as whether the technology fits the CFTC’s existing core principles. Hyperliquid’s published terms state that neither the interface nor the blockchain is licensed, approved, authorized or registered by a governmental authority or regulatory body in any jurisdiction.