Kraken Launches Investigation into HIP-3 Compliant Decentralized Exchange Powered by Hyperliquid Technology
On the Hyperliquid testnet, a deployer known as Kraken has granted testing privileges to ten wallets and has currently met three out of five compliance criteria. This suggests that the centralized exchange may be preparing to launch a permissioned HIP-3 market.
Summary
- Testing permissions have been allocated to ten wallets in a regulated environment.
- Currently, three out of five compliance metrics are being assessed, which include required activities such as position reductions and collateral transfers.
- As of now, Kraken has not publicly acknowledged its role in the testnet deployment.
- HIP-3 allows external developers to create perpetual markets utilizing Hyperliquid’s trading infrastructure.
On August 22, Blockworks analyst Shaunda Devens reported that a deployer called “Kraken HIP-3 test DEX” initiated a permissioning operation referred to as Star Gating on the Hyperliquid testnet, commencing on August 19.
This deployment has effectively integrated ten wallets as authorized participants, with three out of five compliance criteria currently under review, as Devens pointed out. Furthermore, a validator named “Kraken Exchange Validator” has been recognized.
Unverified Connection Between Kraken and HIP-3 Test
Devens indicated that Hyperliquid has been improving the functionalities of the testnet to accommodate regulated users. Alongside wallet whitelisting, new features now enable deployers to revoke open orders, close positions with reduce-only orders, and manage collateral transfers.
In contrast to typical user-driven trades, these functionalities empower deployers to have direct control over accounts or positions. This setup equips operators with the means to restrict access, maintain compliance, manage risk, and withdraw funds when necessary.
Such protocols are often typical in centralized exchanges, where access is contingent upon identity verification and adherence to compliance regulations. Their integration into HIP-3 could establish a framework for a permissioned market leveraging Hyperliquid’s on-chain order book and settlement processes.
In her analysis, Devens speculated that Kraken might be “the first compliant HIP-3 deployer,” although she emphasized that her observations do not verify 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 branding.
As of the time of this report, neither Kraken nor Hyperliquid has confirmed any collaborative ventures or testing agreements. Current insights suggest that a Kraken-branded deployment is making use of the new controls, but definitive proof linking Kraken as the developer remains unverified.
Understanding Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, enables independent developers to manage perpetual futures markets utilizing HyperCore, the network’s trading engine. HyperCore encompasses the order book, matching mechanisms, margin functionalities, and liquidation protocols, allowing each deployer to set their market rules and trading conditions.
Earlier reports from crypto.news noted that HIP-3 was officially launched on the mainnet on October 13, 2025. To function independently as a perpetual exchange without needing authorization from Hyperliquid’s central team, developers must stake 500,000 HYPE.
Markets established can define asset specifications, price oracles, collateral prerequisites, margin limits, leverage restrictions, and funding approaches. The first three assets can be listed without a Dutch auction, while subsequent assets will necessitate a bidding process among deployers.
The 500,000 HYPE staking requirement serves as a financial safety net. Validators have the power to penalize this stake if a deployer fails to comply with oracle usage regulations or market standards, with this accountability enduring for 30 days following the operator’s market closure.
Markets created under HIP-3 allow deployers to retain 50% of generated fees. A report from July 3 indicated that open interest in HIP-3 surpassed $1.43 billion, with contracts linked to equities and commodities constituting seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could have a profound impact on this framework. While anyone can initiate a HIP-3 market as long as they meet protocol standards, a deployer utilizing Star Gating could confine trading to authorized wallets within their market.
This system enables operators to combine public blockchain settlement with identity verification, geographical restrictions, or other specific account regulations. It remains undetermined whether these features will be implemented on the mainnet, and under what conditions.
Kraken’s Strategies in Regulated and Blockchain Markets
The emphasis on the testnet is noteworthy, especially as Kraken and its parent company, Payward, have been adapting in 2026 to encompass 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 includes over 7,000 traditional U.S.-listed stocks, approximately 700 xStocks, and more than 600 crypto assets, all accessible through a single account.
Standard stock services are handled by Payward Europe Digital Solutions, an investment platform regulated under the EU’s MiFID II framework and based in Cyprus. Kraken has announced that xStocks have facilitated over $38 billion in transaction volume since their launch in June 2025.
Earlier in 2026, the company introduced xChange, an on-chain execution system that initially supported over 70 tokenized equities on Ethereum and Solana. Following this, Kraken authorized eligible clients outside the U.S. to use specific xStocks as collateral for futures and margin positions.
Payward is also planning to broaden its offerings beyond U.S. equities. After a partnership with trading infrastructure firm GTN in July, they plan to incorporate shares from Hong Kong and aim to expand into the UK, Europe, South Korea, and other regulated markets, depending on local laws.
Devens highlighted Hyperliquid’s advancements related to xStocks and Payward’s recent endeavors as potential signs of collaboration with Kraken during the testing phase. However, her conclusions remain primarily speculative, based on names and timelines rather than verified information from either party.
U.S. Derivative Regulations May Limit Access
For users in the U.S., a permissioned HIP-3 deployment does not guarantee lawful access to on-chain perpetual contracts. Typically, commodity derivatives accessible to American retail investors must be offered by entities registered with the Commodity Futures Trading Commission.
