Kraken Launches Investigation into HIP-3 Compliant Decentralized Exchange Powered by Hyperliquid Technology
On the Hyperliquid testnet, a deployer identified as Kraken has allowed testing access to ten wallets, presently meeting three out of five required compliance benchmarks. This suggests that the centralized exchange might be preparing to launch a permissioned HIP-3 market.
Summary
- Ten wallets are authorized for testing in a regulated environment.
- Three out of five compliance metrics are currently under review, which includes actions like position reductions and collateral adjustments.
- At this time, Kraken has not publicly acknowledged its role in the testnet deployment.
- HIP-3 enables external developers to create perpetual markets using Hyperliquid’s trading framework.
On August 22, analyst Shaunda Devens from Blockworks reported that a deployer named “Kraken HIP-3 test DEX” began a permissioning process known as Star Gating on the Hyperliquid testnet, which commenced on August 19.
This deployment has effectively integrated ten wallets as recognized participants, with three out of five compliance standards currently under assessment, as highlighted by Devens. A validator labeled as “Kraken Exchange Validator” has also been acknowledged.
Unverified Link Between Kraken and HIP-3 Test
Devens noted that Hyperliquid has been enhancing the functionalities of the testnet to serve regulated users. Beyond wallet whitelisting, new tools now empower deployers to cancel open orders, close positions with reduced-only orders, and manage collateral transfers.
Unlike typical user-driven trades, these functionalities allow deployers to directly influence accounts or positions. This setup equips operators with the ability to oversee access, ensure compliance, reduce risk, and withdraw funds as needed.
Such protocols are typically observed in centralized exchanges, where access relies on identity verification and compliance regulations. The integration of these protocols into HIP-3 could establish a permissioned market utilizing Hyperliquid’s on-chain order book and settlement systems.
In her analysis, Devens speculated that Kraken could be “the first compliant HIP-3 deployer,” although she emphasized that her findings do not verify Kraken’s active participation. Hyperliquid’s testnet permits permissionless deployments, enabling any independent user to create a market or validator using the platform’s branding.
As of this report, neither Kraken nor Hyperliquid has confirmed any collaboration or testing agreements. Current insights suggest that a Kraken-branded deployment is utilizing the newly developed controls, but definitive proof linking Kraken as the deployer remains unverified.
Understanding Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, empowers independent developers to manage perpetual futures markets using HyperCore, the network’s trading engine. HyperCore encompasses the order book, matching mechanisms, margin features, and liquidation protocols, allowing each deployer to establish their market rules and trading terms.
Previous reports from crypto.news indicated that HIP-3 was officially launched on the mainnet on October 13, 2025. To operate autonomously as a perpetual exchange without needing approval from Hyperliquid’s central team, developers must stake 500,000 HYPE.
Markets developed can define asset characteristics, price oracles, collateral rules, margin limits, leverage restrictions, and funding methods. The first three assets can be listed without requiring a Dutch auction, while subsequent assets will require a bidding process among deployers.
The 500,000 HYPE staking requirement ensures a financial safety net. Validators may penalize this stake if a deployer fails to meet oracle usage standards or market requirements, with this responsibility lasting for 30 days after the closure of the operator’s market.
Markets established under HIP-3 allow deployers to retain 50% of the fees generated. An update dated July 3 revealed that open interest in HIP-3 exceeded $1.43 billion, with contracts linked to equities and commodities making up seven of Hyperliquid’s top ten markets by trading volume.
These permissioned capabilities may significantly affect this framework. Although anyone can initiate a HIP-3 market if they meet protocol requirements, a deployer utilizing Star Gating could limit trading to approved wallets within their market.
This mechanism allows operators to merge public blockchain settlement with identity verification, geographical restrictions, or other specific account regulations. It remains unclear if these features will be implemented on the mainnet and under what conditions.
Kraken’s Strategies in Regulated and Blockchain Markets
The focus on the testnet is crucial, particularly as Kraken and its parent company, Payward, have been evolving 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 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 handled by Payward Europe Digital Solutions, an investment platform regulated under the EU’s MiFID II framework, located in Cyprus. Kraken has reported 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 initially supporting more than 70 tokenized equities on Ethereum and Solana. Following this, Kraken allowed qualified clients outside the U.S. to use select xStocks as collateral for futures and margin positions.
Payward is also considering expanding its offerings beyond U.S. equities. After a collaboration with trading infrastructure firm GTN in July, they aim to incorporate Hong Kong shares and expand into the UK, Europe, South Korea, and other regulated markets, depending on local regulations.
Devens highlighted Hyperliquid’s advancements related to xStocks and Payward’s recent initiatives as possible indicators of a partnership with Kraken during the testing period. Nevertheless, her conclusions remain largely speculative, based on names and timelines rather than confirmed 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 legal access to on-chain perpetual contracts. Generally, commodity derivatives available to American retail investors must be provided by entities registered with the Commodity Futures Trading Commission.
