CME Chairman Says Hyperliquid Lacks KYC and Faces Challenges Entering the U.S.
Terry Duffy, CEO of the Chicago Mercantile Exchange, stated in the Bloomberg Odd Lots podcast that Hyperliquid cannot solely rely on providing underlying infrastructure to shift all regulatory responsibilities to users or deployers. He believes the platform has an obligation to oversee trading to ensure a fair and orderly market.
Duffy pointed out that the lack of customer identity verification, high leverage, and automatic liquidation mechanisms could trigger chain liquidations, impacting the market. He mentioned he has communicated with founder Jeff Yan, acknowledging his capabilities but noting multiple compliance issues with the operational model.
He emphasized that to enter the U.S. market, compliance with U.S. laws is essential. Previously, Trump stated that the CFTC is working to bring Hyperliquid into the U.S. in a compliant and legal manner. Hyperliquid currently operates outside the U.S., but some users access it via VPN.
The podcast discussion also covered prediction markets, perpetual contracts, and regulatory evolution. Duffy expressed caution regarding some offshore high-leverage products and has previously sued the CFTC over the classification of perpetual contracts.
Jeff Yan previously articulated Hyperliquid's positioning as a protocol, allowing deployers to create markets on-chain and discussed the compliance path in the U.S. Duffy's comments directly addressed the issue of responsibility allocation.
In terms of market mechanisms, traditional exchanges emphasize institutional oversight and customer verification obligations, while on-chain protocols delegate some functions to deployers and users. The beneficiaries are participants following KYC-compliant paths, while the pressured parties are those relying on unverified high-leverage offshore trading volumes.
Source: Public Information
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Terry Duffy has long led CME, promoting electronic trading and the expansion of the derivatives market, and has publicly questioned offshore high-leverage perpetual products multiple times. In the October 20, 2026 Odd Lots interview, he compared Hyperliquid's responsibility allocation with core U.S. regulatory principles, continuing his cautious stance on prediction markets and perpetual contracts.
In terms of capital pathways, CME, as a regulated exchange, sets customer verification and market oversight as entry conditions. Hyperliquid, on the other hand, allows deployers to create markets through the protocol layer, shifting some compliance responsibilities downwards. Resources are concentrated on on-chain liquidity and deployment mechanisms rather than unified KYC.
This is similar to the regulatory boundary differences between other offshore derivatives platforms and traditional exchanges. The current phase in the U.S. involves discussions on incorporating some on-chain activities into a compliance framework, with the allocation of responsibilities becoming a key variable.
Essentially, this pertains to regulatory changes. U.S. derivatives rules require exchanges to fulfill oversight obligations; if a platform only provides infrastructure and completely shifts verification and liquidation responsibilities, it conflicts with existing core principles, affecting its legal operating path within the U.S.
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Infrastructure must also be supervised; responsibilities cannot be fully delegated.
No KYC high leverage exposes liquidation risks first.
Compliance is necessary to enter the U.S.; protocol layers are not an exemption reason.