The United Kingdom’s Financial Conduct Authority (FCA) has issued a formal warning against Hyperliquid and the Hyper Foundation, flagging them as potentially unauthorized financial service providers. The alert, published on the FCA’s official warning list on May 21, states that Hyperliquid, its protocol application, and associated social media channels may be offering or promoting financial products within the UK without the required authorization. The regulator explicitly advised consumers to avoid transacting with the platform, emphasizing that unlicensed firms cannot provide the protections available through regulated services, including access to the Financial Ombudsman Service or the Financial Services Compensation Scheme.
The warning places significant pressure on one of the largest decentralized exchanges for perpetual futures trading. Hyperliquid has amassed $255 million in revenue by May 20 of this year, and its native token, HYPE, has surged 101% year-to-date, underscoring the platform’s scale. The FCA’s action signals heightened scrutiny of decentralized finance (DeFi) venues, especially those that blur the line between technology protocols and financial services. For UK-based users, the immediate consequence is a clear directive from the regulator to cease all engagement with Hyperliquid, which could lead to the platform restricting access or withdrawing services for UK residents to avoid further enforcement action.
Amid this regulatory development, traditional exchange operators are increasingly examining the perpetual futures model that underlies Hyperliquid’s success. Intercontinental Exchange (ICE) CEO Jeffrey Sprecher, whose company owns the New York Stock Exchange, revealed last week that ICE is studying Hyperliquid’s structure and discussing with regulators why established venues cannot offer comparable products. This comes as the U.S. market begins to open to regulated crypto perpetual futures. On May 29, the Commodity Futures Trading Commission (CFTC) approved the first regulated crypto perps for U.S. participants, and firms like Kalshi and Coinbase have swiftly launched Bitcoin and Ethereum perpetual contracts. In contrast, CME Group CEO Terry Duffy criticized the CFTC’s move, arguing that highly leveraged perpetual futures—sometimes offering up to 50x leverage—expose retail investors to enormous risks they may not fully understand.
The juxtaposition of the FCA’s crackdown and ICE’s exploration highlights the growing global tension around crypto derivatives. While regulators grapple with consumer protection in the DeFi space, established financial infrastructure players see potential in the innovative trading mechanisms. For Hyperliquid, the FCA warning is a tangible operational threat in one of the world's largest financial hubs, possibly motivating the foundation to seek formal registration or risk being completely cut off from UK investors.
