Kraken Could Be Developing a HIP-3 Compliant Decentralized Exchange Powered by Hyperliquid
A deployer on the Hyperliquid testnet operating under the name Kraken has authorized ten wallets for testing purposes and has evaluated three out of five compliance controls. This suggests that the centralized exchange might be exploring a permissioned HIP-3 market.
Summary
- Ten wallets have been approved for the test deployment through a gating mechanism.
- Three of the five compliance controls being monitored have been implemented, including mandatory position reductions and collateral transfers.
- Kraken has not yet confirmed its ownership or participation in the testnet deployment.
- HIP-3 allows external developers to launch perpetual markets utilizing Hyperliquid’s trading framework.
On August 22, Blockworks analyst Shaunda Devens reported that a deployer named “Kraken HIP-3 test DEX” initiated a permissioning system called Star Gating on Hyperliquid’s testnet starting August 19.
This deployment has added ten wallets to its approved-user list and successfully tested three of the five compliance controls mentioned on the testnet, as noted by Devens. Furthermore, a validator has been registered under the identifier “Kraken Exchange Validator.”
Unverified Link Between Kraken and HIP-3 Test
According to Devens, Hyperliquid has been enhancing testnet features that could assist regulated or licensed participants. In addition to wallet whitelisting, the observed functionalities allow a deployer to cancel open orders from users, execute position closures via reduce-only orders, and manage collateral transfers.
Unlike typical user-initiated trades, each action gives the deployer direct control over an account or position. This setup permits an operator to use these features to restrict access, comply with sanctions or legal mandates, manage risk, and withdraw funds from an account as required.
Such measures are standard in centralized exchanges, where account access relies on identity verification and compliance checks. Their implementation in HIP-3 could establish a permissioned market while still using Hyperliquid’s on-chain order book and settlement framework.
In her analysis, Devens speculated whether Kraken might emerge as “the first compliant HIP-3 deployer,” although she emphasized that simply mentioning the name does not confirm Kraken’s involvement. Hyperliquid’s testnet permits permissionless deployments, which implies that any unrelated user could establish a market or a validator using the exchange’s name.
At the time of this report, neither Kraken nor Hyperliquid has publicly acknowledged any collaboration or testing. The present evidence indicates a Kraken-branded deployment utilizing the nascent controls, but it does not validate Kraken as the developer.
Understanding the HIP-3 Framework by Hyperliquid
HIP-3, or Hyperliquid Improvement Proposal 3, allows independent developers to run perpetual futures markets leveraging HyperCore, the network’s trading engine. HyperCore provides the order book, matching system, margin features, and liquidation processes, while each deployer sets their own market rules and trading terms.
Per earlier reports from crypto.news, HIP-3 was launched on the mainnet on October 13, 2025. To operate an independent perpetual exchange without requiring approval from Hyperliquid’s primary team, a builder must stake 500,000 HYPE.
Deployers have the discretion to specify listed assets, price oracles, collateral requirements, margin standards, leverage limits, and funding specifications. The first three assets can be listed without an auction; however, subsequent additions necessitate a Dutch auction among deployers.
The requirement to stake 500,000 HYPE serves as a financial security deposit. Validators can impose penalties on this stake if a deployer violates oracle usage rules or breaches market regulations, with this requirement being enforced for 30 days after the operator’s market closure.
Markets deployed under HIP-3 enable the retainment of 50% of the generated fees by the deployer. A report from July 3 indicated that the open interest in HIP-3 surpassed $1.43 billion, with contracts relating to equities and commodities representing seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly affect this model. While any individual may deploy a HIP-3 market upon meeting protocol stipulations, a deployer leveraging Star Gating could restrict trading on their market to authorized wallets.
This arrangement would permit an operator to blend public blockchain settlement with identity verification, location restrictions, or other account-specific regulations. Whether such features will be available on the mainnet, and under what circumstances, remains to be determined.
Kraken’s Progress into Regulated and Blockchain Markets
The name linked to the testnet has garnered attention precisely because Kraken and its parent company, Payward, have been making strides throughout 2026 to incorporate securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange started trading for U.S. stocks to eligible customers within the European Economic Area. This service encompasses over 7,000 traditional U.S.-listed stocks, approximately 700 xStocks, and more than 600 crypto assets, all accessible through a singular account.
Providing traditional stock services is Payward Europe Digital Solutions, an investment firm based in Cyprus licensed under the EU’s MiFID II regulations. Kraken has stated that xStocks have generated over $38 billion in transaction volume since the launch of these tokenized products in June 2025.
Earlier in 2026, the company introduced xChange, an on-chain execution system that initially supported over 70 tokenized equities across Ethereum and Solana. Subsequently, Kraken permitted eligible customers outside of the U.S. to use selected xStocks as collateral for futures and margin positions.
Payward also aims to broaden its offerings beyond U.S. equities. Following a July agreement with the trading infrastructure firm GTN, it plans to include shares from Hong Kong, eventually extending into the UK, Europe, South Korea, and other regulated markets, contingent upon local regulations.
Devens pointed to Hyperliquid’s initiatives involving xStocks and Payward’s recent activities as signals suggesting a possible connection to Kraken in the test process. Nevertheless, her evaluation remains speculative, relying on names and timelines rather than verified information from either entity.
U.S. Derivative Regulations May Limit Access
For users in the U.S., merely having a permissioned HIP-3 deployment does not render on-chain perpetual contracts legally accessible. Typically, commodity derivatives provided to American retail investors must be offered by companies registered with the Commodity Futures Trading Commission.
