Kraken Launches Inquiry into HIP-3 Compliant Decentralized Exchange Using Hyperliquid Technology
On the Hyperliquid testnet, a deployer named Kraken has granted testing permissions to ten wallets and has currently met three out of five compliance benchmarks. This suggests that the centralized exchange may be preparing to launch a permissioned HIP-3 market.
Summary
- Authorization for testing permissions has been distributed to ten wallets within a controlled environment.
- Currently, three out of five compliance benchmarks are being assessed, including necessary actions like mandated position reductions and collateral transfers.
- As of now, Kraken has not publicly confirmed its participation in the testnet deployment.
- HIP-3 facilitates external developers to create perpetual markets using Hyperliquid’s trading framework.
On August 22, analyst Shaunda Devens from Blockworks reported that a deployer referred to as “Kraken HIP-3 test DEX” initiated a permissioning activity called Star Gating on the Hyperliquid testnet, beginning on August 19.
This deployment has effectively included ten wallets as authorized participants, with three of the five compliance criteria currently under review, as noted by Devens. Furthermore, a validator identified as “Kraken Exchange Validator” is listed.
Unverified Connection Between Kraken and HIP-3 Test
Devens highlighted that Hyperliquid has been enhancing the testnet’s features to accommodate regulated users. In addition to wallet whitelisting, new functionalities now enable deployers to withdraw open orders, close positions via reduce-only orders, and manage collateral transfers.
In contrast to standard user-driven trades, these features provide deployers with direct oversight over accounts or positions. This setup equips operators with tools to restrict access, ensure compliance, manage risk, and withdraw funds as necessary.
Such protocols are typically seen in centralized exchanges, where access is contingent upon identity verification and compliance regulations. Their integration into HIP-3 could lay the groundwork for a permissioned market leveraging Hyperliquid’s on-chain order book and settlement mechanisms.
In her analysis, Devens speculated that Kraken might be “the first compliant HIP-3 deployer,” although she emphasized that her observation does not confirm Kraken’s active participation. Hyperliquid’s testnet allows for permissionless deployments, enabling any independent user to create a market or validator using the exchange’s name.
As of this report, neither Kraken nor Hyperliquid has confirmed any collaborative activities or testing setups. Current information suggests that a Kraken-branded deployment is utilizing the new controls, but definitive proof linking Kraken as the developer remains elusive.
Understanding Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, permits independent developers to operate perpetual futures markets using HyperCore, the network’s trading engine. HyperCore includes the order book, matching engines, margin functionalities, and liquidation protocols, allowing each deployer to define their own market rules and trading conditions.
Earlier reports from crypto.news indicated that HIP-3 was formally launched on the mainnet on October 13, 2025. To function independently as a perpetual exchange without requiring approval from Hyperliquid’s central team, developers must stake 500,000 HYPE.
Markets created can establish asset definitions, pricing oracles, collateral specifications, margin limits, leverage constraints, and funding mechanisms. The first three assets can be listed without a Dutch auction, while additional assets will necessitate a bidding process among deployers.
The 500,000 HYPE staking requirement acts as a financial safeguard. Validators can penalize this stake if a deployer fails to comply with oracle usage regulations or market standards, with this accountability extending for 30 days after the operator’s market concludes.
Markets initiated under HIP-3 allow deployers to retain 50% of the generated fees. A report from July 3 noted that open interest in HIP-3 surpassed $1.43 billion, with contracts related to equities and commodities comprising seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly influence this framework. While anyone can establish a HIP-3 market as long as they abide by protocol standards, a deployer utilizing Star Gating could restrict trading to approved wallets within their market.
This method provides operators with the ability to merge public blockchain settlement with identity verification, geographic restrictions, or other specific account regulations. It remains to be seen whether these features will be implemented on the mainnet and under what circumstances.
Kraken’s Strategies in Regulated and Blockchain Markets
The attention drawn to the testnet is notable, particularly as Kraken and its parent company, Payward, have been adapting in 2026 to integrate securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange began offering U.S. stocks to qualified clients in the European Economic Area. This service includes over 7,000 traditional U.S.-listed stocks, around 700 xStocks, and more than 600 crypto assets, all accessible through a single account.
Standard stock services are managed by Payward Europe Digital Solutions, an investment platform located in Cyprus, regulated under the EU’s MiFID II framework. Kraken noted that xStocks have accounted for over $38 billion in transaction volume since their introduction in June 2025.
Earlier in 2026, the firm launched xChange, an on-chain execution system that initially supported over 70 tokenized equities on Ethereum and Solana. Following this, Kraken allowed eligible clients outside the U.S. to use certain xStocks as collateral for futures and margin positions.
Payward also intends to expand its offerings beyond U.S. equities. After a partnership with trading infrastructure company GTN in July, they aim to include shares from Hong Kong, with plans to broaden into the UK, Europe, South Korea, and other regulated markets, according to local regulations.
Devens pointed to Hyperliquid’s advancements related to xStocks and Payward’s recent initiatives as possible indicators of collaboration with Kraken during the testing phase. However, her conclusions remain largely speculative, based on names and timelines rather than verified information from either organization.
U.S. Derivative Regulations May Limit Access
For U.S. users, a permissioned HIP-3 deployment does not guarantee lawful access to on-chain perpetual contracts. Generally, commodity derivatives offered to American retail investors must come from companies registered with the Commodity Futures Trading Commission.
