Kraken Launches Investigation into HIP-3 Compliant Decentralized Exchange Using Hyperliquid Technology
On the Hyperliquid testnet, a deployer recognized as Kraken has approved ten wallets for testing and assessed three out of five compliance controls. This suggests that the centralized exchange may be considering a permissioned HIP-3 market.
Summary
- Ten wallets have successfully been cleared for testing deployment through a gating mechanism.
- At present, three of the five compliance controls are under scrutiny, with active implementations including required position reductions and collateral transfers.
- Kraken has not yet publicly acknowledged its involvement in the testnet deployment.
- HIP-3 empowers external developers to build perpetual markets by utilizing Hyperliquid’s trading framework.
On August 22, Blockworks analyst Shaunda Devens reported that a deployer known as “Kraken HIP-3 test DEX” initiated a permission system called Star Gating on Hyperliquid’s testnet, which began on August 19.
This deployment has successfully added ten wallets to its list of authorized users and reviewed three out of the five compliance controls outlined on the testnet, according to Devens. Additionally, a validator has been registered under the title “Kraken Exchange Validator.”
Unverified Connection Between Kraken and HIP-3 Test
Devens noted that Hyperliquid has been upgrading testnet features to assist regulated or licensed participants. Beyond wallet whitelisting, new capabilities let a deployer cancel users’ open orders, close positions via reduce-only orders, and oversee collateral transfers.
Unlike standard user-initiated trades, each action provides the deployer with direct authority over an account or position. This framework allows operators to use these tools to limit access, ensure adherence to regulatory standards, manage risks, and withdraw funds as required.
Such mechanisms are typical in centralized exchanges, where account access relies on identity verification and compliance protocols. Their introduction in HIP-3 could pave the way for a permissioned market while leveraging Hyperliquid’s on-chain order book and settlement infrastructure.
In her analysis, Devens speculated that Kraken might be “the first compliant HIP-3 deployer,” but underscored that merely mentioning the name does not confirm Kraken’s participation. Hyperliquid’s testnet permits permissionless deployments, enabling any independent user to establish a market or validator under the exchange’s brand.
As of this report, neither Kraken nor Hyperliquid has publicly confirmed any collaborative efforts or testing. Current information implies a Kraken-branded deployment using the new controls, but it does not definitively verify Kraken as the developer.
Exploring the HIP-3 Framework by Hyperliquid
HIP-3, or Hyperliquid Improvement Proposal 3, enables independent developers to handle perpetual futures markets using HyperCore, the network’s trading engine. HyperCore offers the order book, matching systems, margin functionalities, and liquidation processes, while each deployer defines their market regulations and trading conditions.
Previous reports from crypto.news highlighted that HIP-3 was officially launched on the mainnet on October 13, 2025. To function independently as a perpetual exchange without needing approval from Hyperliquid’s core team, a builder must stake 500,000 HYPE.
Deployers are empowered to specify listed assets, price oracles, collateral parameters, margin requirements, leverage caps, and funding protocols. The first three assets can be listed without an auction; however, additional assets require a Dutch auction among deployers.
The requirement to stake 500,000 HYPE serves as a financial guarantee. Validators can impose penalties on this stake if a deployer breaches oracle usage policies or market regulations, and this obligation remains for 30 days following the closure of the operator’s market.
Markets formed under HIP-3 allow the deployer to keep 50% of the fees collected. A report from July 3 indicated that open interest in HIP-3 exceeded $1.43 billion, with contracts related to equities and commodities constituting seven of Hyperliquid’s top ten markets by trading volume.
These permissioned features could significantly influence this structure. While anyone can initiate a HIP-3 market as long as they comply with protocol requirements, a deployer utilizing Star Gating may restrict trading in their market to approved wallets.
This mechanism enables an operator to combine public blockchain settlement with identity verification, location limits, or other account-specific regulations. It remains uncertain whether such features will be enacted on the mainnet and under what conditions.
Kraken’s Strategy in Regulated and Blockchain Markets
The association with the testnet has attracted attention, especially as Kraken and its parent company, Payward, have been progressing throughout 2026 to integrate securities, tokenized assets, and on-chain trading solutions.
On August 18, the exchange began trading U.S. stocks for eligible clients within the European Economic Area. This offering encompasses over 7,000 traditional U.S.-listed stocks, around 700 xStocks, and more than 600 crypto assets, all accessible through a single account.
Providing traditional stock services is Payward Europe Digital Solutions, an investment firm based in Cyprus, regulated under the EU’s MiFID II framework. Kraken reported that xStocks have generated over $38 billion in transaction volume since the rollout of these tokenized products in June 2025.
Earlier in 2026, the firm launched xChange, an on-chain execution system that initially supported over 70 tokenized equities across Ethereum and Solana. Following this, Kraken permitted eligible clients outside the U.S. to utilize specific xStocks as collateral for futures and margin positions.
Payward also aims to expand its offerings beyond U.S. equities. After a partnership with trading infrastructure firm GTN in July, it plans to include shares from Hong Kong, eventually extending to the UK, Europe, South Korea, and other regulated markets, depending on local regulations.
Devens pointed out Hyperliquid’s initiatives involving xStocks and Payward’s recent activities as potential clues to a connection to Kraken during the testing phase. However, her conclusions remain speculative, primarily based on names and timelines rather than confirmed data from either party.
U.S. Derivative Regulations May Limit Accessibility
For users in the U.S., a permissioned HIP-3 deployment does not automatically assure legal access to on-chain perpetual contracts. Generally, commodity derivatives offered to American retail investors must be provided by firms registered with the Commodity Futures Trading Commission.
