Hyperliquid Policy Committee Submits Feedback to European…

The Hyperliquid Policy Committee has submitted feedback to the European Commission on the future of the Markets in Crypto-Assets Regulation, bringing the decentralized perpetual-futures ecosystem into the EU’s debate over how MiCA should evolve as onchain markets become more sophisticated.

The submission addresses questions as the EU reviews its digital-finance framework and considers whether existing rules adequately cover decentralized finance, blockchain-based trading and crypto services that do not resemble centralized intermediaries. A central issue is how European rules should treat decentralized protocols whose software can operate without a company directly controlling user funds or approving transactions. MiCA includes a distinction for services provided in a “fully decentralized manner without any intermediary,” but it does not fully define how that standard applies across different DeFi architectures.

MiCA was designed mainly around identifiable issuers and crypto-asset service providers, which can be required to obtain authorization and comply with rules on governance, custody, conflicts of interest, consumer protection and market conduct. Decentralized protocols create a harder question because functions traditionally performed by exchanges may be executed by smart contracts and distributed networks. Hyperliquid illustrates this: its ecosystem supports onchain spot and perpetual-futures trading, with orders, positions and settlement integrated into blockchain infrastructure rather than a centralized exchange database.

The policy question is not whether an application calls itself decentralized. Regulators need to determine whether an identifiable person or company actually exercises control over activities that would ordinarily require authorization, including customer assets, transaction execution, protocol upgrades, frontend access and other operational functions. European regulators have warned that decentralization claims should be evaluated by substance rather than branding. Applying rules written for custodial intermediaries directly to autonomous software can also create obligations that no single participant is technically capable of fulfilling.

The submission comes as the EU moves beyond MiCA’s initial implementation and evaluates gaps in digital-asset markets. MiCA’s stablecoin rules began applying in June 2024, followed by its broader crypto-asset service-provider regime in December 2024. The legislation left some areas, including significant portions of DeFi, outside its immediate comprehensive framework while requiring further assessment. That has made the definition of genuine decentralization increasingly important. A broad interpretation could pull protocol developers, interfaces or governance participants into licensing regimes designed for exchanges and custodians, while a narrow one could let businesses with substantial practical control avoid equivalent requirements.

The Hyperliquid Policy Committee’s feedback enters that debate rather than changing European law. A consultation submission has no immediate regulatory effect, and the European Commission is not required to adopt its recommendations. Any substantial expansion or amendment of MiCA would need to proceed through the EU’s legislative and regulatory processes. The intervention reflects a shift in crypto policy discussions: Europe’s first major challenge was establishing rules for centralized exchanges, token issuers and stablecoins, while the next phase increasingly concerns onchain infrastructure where identifying the regulated intermediary is harder. For Hyperliquid and other DeFi ecosystems, the outcome could determine whether European regulation focuses on activities and points of control or extends conventional intermediary rules directly to decentralized software. The submission is not a MiCA exemption or approval for Hyperliquid.