Kraken Launches Investigation into HIP-3 Compliant Decentralized Exchange Powered by Hyperliquid Technology
On the Hyperliquid testnet, a deployer named Kraken has granted testing access to ten wallets, which currently meet three out of five essential compliance requirements. This suggests that the centralized exchange might be preparing to launch a permissioned HIP-3 market.
Summary
- Testing access has been granted to ten wallets in a regulated environment.
- Three out of five compliance metrics are currently being assessed, including activities such as position adjustments and collateral modifications.
- At this point, Kraken has not made any public confirmation of its participation in the testnet deployment.
- HIP-3 permits external developers to create perpetual markets using Hyperliquid’s trading infrastructure.
On August 22, Blockworks analyst Shaunda Devens disclosed that a deployer referred to as “Kraken HIP-3 test DEX” initiated a permissioning process called Star Gating on the Hyperliquid testnet, which commenced on August 19.
This deployment has successfully included ten wallets as recognized participants, with three out of five compliance measures currently being evaluated, as noted by Devens. An additional validator known as “Kraken Exchange Validator” has also been identified.
Unverified Connection Between Kraken and HIP-3 Test
Devens remarked that Hyperliquid has been enhancing the testnet functionalities to cater to regulated users. Beyond wallet whitelisting, the recent upgrades now enable deployers to cancel open orders, close positions using reduced-only orders, and manage collateral transfers.
These capabilities differ from standard user-driven transactions, granting deployers authority over accounts or positions. This framework allows operators to manage access, ensure compliance, mitigate risks, and withdraw funds when necessary.
Such features are commonly associated with centralized exchanges, where access is contingent upon identity verification and compliance standards. The integration of these protocols in HIP-3 could facilitate a permissioned market utilizing Hyperliquid’s on-chain order book and settlement systems.
In her analysis, Devens hypothesized that Kraken may be “the first compliant HIP-3 deployer,” though she clarified that her findings do not substantiate Kraken’s active participation. Hyperliquid’s testnet supports permissionless deployments, permitting any user to establish a market or validator with the platform’s branding.
As of this update, neither Kraken nor Hyperliquid has verified any partnership or testing arrangements. Current insights suggest a Kraken-branded deployment is utilizing the newly implemented controls, yet definitive evidence linking Kraken as the deployer remains absent.
Understanding Hyperliquid’s HIP-3 Framework
HIP-3, or Hyperliquid Improvement Proposal 3, enables independent developers to manage perpetual futures markets using HyperCore, the network’s trading engine. HyperCore includes the order book, matching algorithms, margin capabilities, and liquidation protocols, empowering each deployer to define their market rules and trading conditions.
Previous reports from crypto.news indicated that HIP-3 was officially launched on the mainnet on October 13, 2025. To operate independently as a perpetual exchange without needing consent from Hyperliquid’s central team, developers must stake 500,000 HYPE.
Markets developed can determine parameters for assets, price oracles, collateral rules, margin limits, leverage restrictions, and funding mechanics. The first three assets can be listed without the need for a Dutch auction, while subsequent assets will require a bidding process amongst deployers.
The requirement of staking 500,000 HYPE serves as a financial security measure. Validators can penalize this stake if a deployer fails to comply with oracle usage regulations or market standards, with this obligation lasting for 30 days after the market closure.
Markets established under HIP-3 permit deployers to retain 50% of the fees generated. An update on July 3 revealed that open interest in HIP-3 exceeded $1.43 billion, with contracts related to equities and commodities accounting for seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly influence this framework. Although anyone can launch a HIP-3 market if they follow protocol guidelines, a deployer using Star Gating could limit trading to specific wallets within their market.
This arrangement enables operators to merge public blockchain settlement with identity verification, geographic restrictions, or other specific account regulations. It remains to be seen whether these functionalities will be applied to the mainnet and under what terms.
Kraken’s Strategies in Regulated and Blockchain Markets
The emphasis on the testnet is vital, especially 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 eligible 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 overseen by Payward Europe Digital Solutions, an investment platform regulated under the EU’s MiFID II framework, based in Cyprus. Kraken announced that xStocks have amassed over $38 billion in transaction volume since their inception in June 2025.
Earlier in 2026, the company launched xChange, an on-chain execution system initially supporting over 70 tokenized equities on Ethereum and Solana. Subsequently, Kraken allowed eligible clients outside the U.S. to use select xStocks as collateral for futures and margin positions.
Payward is also contemplating expansion beyond U.S. equities. Following a partnership with trading infrastructure firm GTN in July, they intend to include Hong Kong shares and extend into the UK, Europe, South Korea, and other regulated markets, contingent upon local regulations.
Devens underscored Hyperliquid’s innovations regarding xStocks and Payward’s recent activities as potential indicators of a partnership with Kraken during the testing period. However, her conclusions are primarily speculative, driven by 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. Typically, commodity derivatives available to American retail investors must be provided by entities registered with the Commodity Futures Trading Commission.
