A little over ten days ago, Trump mentioned Hyperliquid in a cryptocurrency industry conference. He stated that the CFTC is working to bring Hyperliquid to the United States in a "fully compliant, legal" manner.

The President specifically named an on-chain perpetual contract platform without KYC that U.S. retail investors cannot directly access, which is already quite unusual. As we wrote in a previous article, the question has shifted from "Will the U.S. deal with Hyperliquid" to "How is the U.S. preparing to deal with Hyperliquid."

Now, the first name has emerged: Kraken.

Bloomberg reported that Hyperliquid is in talks with Kraken's parent company to enter the U.S. market. While the news came suddenly, traces were already left on-chain.

On August 21, Blockworks analyst Shaunda Devens revealed that a deployment named "Kraken HIP-3 test DEX" appeared on the Hyperliquid testnet. Its Star whitelist feature went live on August 19, with 10 wallets already granted trading permission. The deployer also tested account control functions such as forced liquidation, order cancellation, and collateral transfers, and registered a "Kraken Exchange Validator." In a follow-up report the next day, discussions had already begun on why Kraken was testing Hyperliquid instead of utilizing its own L2.

Kraken has long been researching how to fit Hyperliquid into the U.S. regulatory framework.

Hyperliquid Entering the U.S.

The U.S. commodity derivatives market is divided among three types of institutions. Designated contract markets are responsible for listing contracts, matching trades, and market surveillance; derivatives clearing organizations ensure margin and settlement; futures commission merchants handle account opening, identity verification, client funds, and trading access.

Hyperliquid is restructuring this system. HyperCore handles matching, margin, clearing, and settlement; HIP-3 deployers decide which contracts to list, which oracle to use, and the level of leverage; Builders facilitate trader access and route orders to HyperCore. While traditional finance relies on companies, licenses, and contracts to fulfill these roles, Hyperliquid embeds many rules into its protocol.

Efficiency comes from here, regulatory conflict also comes from here.

The native market of Hyperliquid allows traders to directly connect their wallets, with assets controlled by the traders themselves. The U.S. regulatory system requires a company that can identify customers, monitor transactions, and take over accounts in case of risk. While the protocol can automatically liquidate positions, it cannot replace a licensed entity that holds responsibility for customers.

The new features of the HIP-3 testnet fill this gap.

The Star feature allows deployers to set a whitelist for the market, where only wallets that have completed identity verification can enter. The Account Control feature, on the other hand, allows deployers to cancel orders, submit liquidation-only orders, and move collateral within the corresponding DEX. These correspond precisely to the permissions held by traditional futures brokers: deciding who can trade and forcibly liquidating positions when an account's risk crosses a threshold.

Thus, the structure of a U.S.-compliant Hyperliquid suite becomes clear. HyperCore stays at the base to provide matching, margin, and settlement; Kraken operates a licensed HIP-3 market, responsible for KYC, contract listing, market surveillance, and account risk management; Kraken's clients enter through a familiar trading interface, and orders are ultimately executed on HyperCore.

Hyperliquid does not need to transform the entire chain into a centralized exchange, and Kraken does not need to build an order book, margin, and on-chain settlement system from scratch.

This is a very clear division of labor.

Kraken Completes the Final Piece of the Puzzle

Kraken is well-suited to be in this position because it has spent the past year and a half acquiring the licenses, products, and assets necessary to enter the U.S. market.

In our previous analysis of Kraken's listing path, we mentioned that Kraken acquired derivative exchange Bitnomial for $550 million, obtaining a full set of CFTC licenses for brokerage, clearing, and exchange; and also acquired Backed Finance behind the tokenized stock protocol xStocks. In March of this year, Kraken became the first digital asset bank in the U.S. to receive a Fed master account and partnered with Nasdaq to build a stock tokenization framework.

These actions all point to the same goal. Kraken aims to evolve from a cryptocurrency exchange into a financial infrastructure company capable of handling trading, custody, clearing, payments, and asset issuance.

Hyperliquid happens to fill the gap in Kraken's most challenging self-built piece: an on-chain derivatives trading core engine with real liquidity.

The products on both sides are already connected. Kraken's parent company Payward-controlled xStocks is expanding its integration with HyperCore, while Hyperliquid aims to support stocks, commodities, and pre-IPO contracts through HIP-3. Kraken can bring tokenized assets, U.S. customers, and regulatory licenses to the table, while Hyperliquid provides an order book, margin system, and 24/7 trading.

For Kraken, the deployer of HIP-3 is not just a traffic entry point. The deployer holds the power over contract listings, oracles, leverage parameters, and a share of transaction fees. Whoever is responsible for deploying the U.S. licensed market controls the asset supply and trading access for Hyperliquid's U.S. operations.

This position aligns well with Kraken's listing narrative. It can not only integrate on-chain trading, tokenized stocks, and U.S. licenses into a unified business, but also bypass the most expensive phases of rebuilding order books and market-making networks.

Nado Put in an Awkward Position

In 2024, Kraken incubated the Ethereum L2 project Ink, attempting to replicate Binance's and Coinbase's path of migrating customers, assets, and applications from centralized exchanges to its controlled chain. Nado is the most active protocol on Ink and is the flagship on-chain PerpDEX of this chain.

Ink and Nado originally formed a complete vertical integration solution, but Kraken's collaboration with Hyperliquid has made this narrative awkward.

HyperCore already possesses an order book, margin system, clearing mechanism, and market maker network, while the permissioned HIP-3 hands over KYC, whitelisting, and account risk control back to Kraken. These capabilities heavily overlap with what Nado is building at the trading core level.

Nado continues to maintain its independent order books, leading to competition with Hyperliquid for the same set of market makers, collateral, and traders. Kraken is now supporting two sets of perpetual contract cores, and internally, choices must be made between liquidity incentives, product launches, and distribution resources. Naturally, U.S. compliance operations will receive higher priority, leaving room for Nado to focus on Ink-native assets and airdrop-driven wash trading.

Another approach is to have Nado integrate with HyperCore. Nado can still be in charge of the interface, accounts, and customer relationships, while matching, margin, and settlement are handled by Hyperliquid. This would provide direct access to deeper liquidity, with the trade-off being Nado transitioning from a standalone PerpDEX to either the frontend or builder of HyperCore.

Both approaches aim to weaken Nado's exclusivity.

Kraken's interests do not align with Nado's. Payward is focused on entering the U.S. market, expanding tradable assets, increasing revenue, and achieving listings. HyperCore can expedite the launch of compliant products, giving Kraken enough reasons to invoke an external engine, leaving Nado unfortunately sidelined.

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