DeFi for the select few: Why Hyperliquid is building restricted markets

​Hyperliquid's developers are preparing infrastructure that will allow regulated companies to launch markets accessible only to verified clients. But if decentralized finance was originally built around the idea of connecting a wallet and trading freely, can it still be called DeFi when access to some markets depends on user identification?

The latest development came on October 26. Kraken's parent company, Payward, plans to become the first market operator on a new version of HIP-3 through the regulated entity Bitnomial, where trading access can be restricted to a list of preapproved addresses.

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Hyperliquid, however, is not planning to close its existing markets or introduce mandatory identity verification for all users. Instead, the model would allow the same public infrastructure to support both open markets and separate trading venues where access rules are set by regulated operators.

How open markets came to have closed doors

To understand why Hyperliquid needs this structure, it helps to look at how HIP-3 has evolved. The mechanism launched in 2025 to allow third-party teams to create perpetual futures markets independently, rather than waiting for the platform itself to list a particular asset.

The concept closely followed the traditional DeFi model: the infrastructure is shared, but decisions about launching individual markets are made by external operators rather than a centralized exchange. Over time, these markets expanded beyond cryptocurrencies to include contracts tied to stocks, equity indexes, gold, commodities, and other assets.

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By the fall of 2026, HIP-3 was no longer an experiment on the fringes of the platform.

Since launch, markets built on HIP-3 have generated approximately $665 billion in trading volume, including around $64.7 billion over the past 30 days alone. At certain points, they accounted for a significant share of all perpetual futures trading on Hyperliquid.

The project is now adding another layer to this established model. Under HIP-3, the operator of an individual market will be able to restrict access to a list of approved addresses. For users, the difference will be fundamental: entering a regular market requires only connecting a wallet, while accessing a regulated market will first require registration with the company responsible for operating it.

Crucially, Hyperliquid itself will not conduct KYC checks or decide who can trade. The market operator will handle customer verification, regulatory compliance, and account management.

In Payward's case, these responsibilities are expected to be divided among several regulated entities. Bitnomial will oversee the market and clearing, while NinjaTrader Clearing will manage customer accounts. Once verified, a user will be able to access the relevant market through a preapproved address.

For the company, this creates an opportunity to move trading activity onto public infrastructure while keeping KYC, customer accounts, and regulatory responsibility within licensed entities.

Why Kraken needs Hyperliquid

Payward's interest in this model did not emerge overnight. In 2026, the company agreed to acquire the regulated U.S. derivatives exchange Bitnomial for up to $550 million. During the summer, Kraken had already begun offering U.S. customers perpetual futures on BTC, ETH, SOL, and XRP through Bitnomial.

In other words, Payward does not need Hyperliquid to gain its first foothold in this market. The group already has regulated infrastructure and the ability to serve U.S. customers.

The new initiative is more interesting for another reason: it would allow some trading activity to move onto public crypto infrastructure while keeping user registration, clearing, and legal responsibility within licensed companies.

For Payward, this approach offers a way to use a partner's existing trading infrastructure while retaining the regulated components of the service within its own entities. The operator remains responsible for functions that cannot be delegated to a decentralized protocol: customer verification, regulatory compliance, and account management.

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For Hyperliquid, meanwhile, this opens up a different market: regulated financial institutions that find it difficult to use fully open trading platforms to serve their customers.

In 2026, U.S. regulators began gradually allowing perpetual crypto derivatives into the regulated market, although such products had previously been available primarily outside the country or through offshore platforms.

Is DeFi with KYC still decentralized finance?

For supporters of the traditional DeFi model, the answer may seem obvious. If users must register with an intermediary, verify their identities, and obtain permission to trade, one of decentralized finance's defining features—open access—disappears.

In Hyperliquid's case, however, the restrictions would not apply across the entire platform. Regular users would still be able to trade on open markets, while identity verification would only be required where an individual operator demands it.

This approach separates two concepts that have often been treated as inseparable in DeFi: public infrastructure and the access rules governing a particular financial product.

For regulated financial institutions, the model addresses a major obstacle. They can use public infrastructure without making their products available to every anonymous wallet.

But this scenario also changes the role of the protocols themselves. Hyperliquid increasingly looks less like a standalone crypto exchange that must attract every trader and decide which markets to offer.

Instead, the project is attempting to become a trading layer on which other companies can build their own products with different access requirements.

Payward's plan still depends on regulatory approval, so it cannot yet be considered an established model. Nevertheless, the experiment already illustrates how the boundary between DeFi and traditional finance is increasingly being drawn not between separate platforms, but within the same infrastructure.

The introduction of KYC requirements for certain Hyperliquid markets therefore does not necessarily mean abandoning the principles of DeFi. Rather, a model is emerging in which the public infrastructure remains shared while access rules are determined by the specific financial product.

An open crypto market and a regulated trading venue serving customers of a U.S. brokerage could coexist on the same underlying infrastructure.