A Hyperliquid testnet deployer using Kraken’s name has whitelisted 10 wallets and tested three compliance controls, raising the possibility that the centralized exchange has been experimenting with a permissioned HIP-3 market.
Summary
- 10 wallets have been approved to use the test deployment through a gating system.
- Three of the five observed controls have been tested, including forced position reductions and collateral transfers.
- Kraken has not confirmed that it owns or operates the testnet deployment.
- HIP-3 lets outside builders run perpetual markets through Hyperliquid’s trading infrastructure.
Blockworks analyst Shaunda Devens reported on Aug. 22 that a deployer called “Kraken HIP-3 test DEX” had activated a permission system known as Star gating on Hyperliquid’s testnet on Aug. 19.
The deployment has added 10 wallets to its approved-user list and tested three of five compliance controls observed on the testnet, according to Devens. A validator has also been registered under the name “Kraken Exchange Validator.”
Kraken’s connection to the HIP-3 test remains unconfirmed
Devens said Hyperliquid has been adding testnet functions that could support regulated or licensed operators. Along with wallet whitelisting, the observed tools let a deployer cancel a user’s open orders, close positions through reduce-only orders, and move collateral.
Unlike an ordinary user-submitted trade, each action gives the deployer direct control over an account or position. An operator could use the functions to restrict access, respond to sanctions or legal orders, reduce risk, and remove funds from an account when its rules require intervention.
Such controls are common at centralized exchanges, where account access depends on identity checks and compliance screening. Applying them to HIP-3 would create a permissioned market that still uses Hyperliquid’s on-chain order book and settlement infrastructure.
In her post, Devens asked whether Kraken could become “the first compliant HIP-3 deployer,” but she also noted that the name does not prove Kraken’s participation. Hyperliquid’s testnet allows permissionless deployments, meaning an unrelated user could create a market or validator carrying the exchange’s name.
Neither Kraken nor Hyperliquid had publicly confirmed a partnership or test when this report was written. The available evidence, therefore, shows that a Kraken-branded deployment exists and has used the new controls, not that Kraken created it.
How Hyperliquid’s HIP-3 framework works
HIP-3, short for Hyperliquid Improvement Proposal 3, allows independent builders to operate perpetual futures markets through HyperCore, the network’s trading engine. HyperCore supplies the order book, matching system, margin functions, and liquidation process, while each deployer selects its markets and trading rules.
As crypto.news previously explained, HIP-3 has been active on mainnet since Oct. 13, 2025. A builder must stake 500,000 HYPE to operate an independent perpetual exchange without approval from Hyperliquid’s core team.
Deployers choose the listed assets, price oracles, collateral, margin requirements, leverage limits, and funding settings. The first three assets can be introduced without an auction, while later listings require deployers to compete through a Dutch auction.
The 500,000 HYPE stake acts as a financial bond. Validators can slash it if a deployer manipulates an oracle or breaks market rules, and the requirement remains in effect for 30 days after the operator closes its markets.
HIP-3 deployers also receive 50% of the fees from their markets. According to the July 3 report, HIP-3 open interest had surpassed $1.43 billion, while contracts tracking equities and commodities had become seven of Hyperliquid’s 10 largest markets by trading volume.
Permissioned functions would modify one important part of that model. Although anyone could still deploy a HIP-3 market after meeting the protocol requirements, a deployer using Star gating could limit trading on its own market to approved wallets.
Such an arrangement could allow an operator to combine public blockchain settlement with identity checks, location restrictions, or other account-level rules. Whether the functions will reach the mainnet, and under what conditions, has not been confirmed.
Kraken has expanded regulated and on-chain markets
The testnet name has attracted attention partly because Kraken and its parent company, Payward, have spent 2026 adding securities, tokenized assets and on-chain trading services.
On Aug. 18, the exchange launched U.S. stock trading for eligible customers across the European Economic Area. The service covers more than 7,000 traditional U.S.-listed stocks, over 700 xStocks, and more than 600 crypto assets through one account.
Payward Europe Digital Solutions, a Cyprus investment firm authorized under the European Union’s MiFID II framework, provides the conventional stock service. Kraken said xStocks had generated more than $38 billion in transaction volume since the tokenized products launched in June 2025.
Earlier in 2026, the company introduced xChange, an on-chain execution system initially supporting more than 70 tokenized equities across Ethereum and Solana. Kraken later allowed eligible customers outside the United States to use selected xStocks as collateral for futures and margin positions.
Payward has also been taking the product beyond U.S. equities. Through a July agreement with trading infrastructure company GTN, it plans to add shares from Hong Kong before moving into the United Kingdom, Europe, South Korea, and other approved markets, subject to local licenses.
Devens cited Hyperliquid’s work involving xStocks and Payward’s recent business activity as reasons the test might be connected to Kraken. Her assessment remains an inference based on the names and timing rather than confirmation from either company.
U.S. derivatives rules would still limit access
For U.S. users, a permissioned HIP-3 deployment would not by itself make on-chain perpetual contracts legally available. Commodity derivatives offered to American retail traders generally must operate through entities registered with the Commodity Futures Trading Commission.
An Aug. 3 review of CFTC crypto oversight found that regulated crypto derivatives venues in the United States operate through designated contract markets, clearing organizations, and registered intermediaries. The agency approved the listing of a Bitcoin perpetual futures contract on a registered exchange in May 2026 and issued guidance covering continuous trading, clearing and settlement.
The CFTC has also pursued offshore derivatives platforms that served U.S. customers without registration. Wallet screening and order controls could help an operator enforce geographic restrictions, but the functions do not replace registration or other legal requirements.
Risk controls also matter because HIP-3 deployers select their own price sources and market settings. On July 28, a Hyperliquid contract tracking SK Hynix shares fell 17.9% intraday after a single unusually low trade on South Korea’s NextTrade entered the contract’s oracle system.
The SK Hynix contract was operated by Trade.xyz under HIP-3. One share changed hands at 1.272 million won, 29.96% below the previous close, before the underlying price recovered from the isolated transaction. HyperInsight said the on-chain contract fell from about $1,128 to $927 and later returned above $1,100.
Trade.xyz retained responsibility for the oracle, leverage rules and settlement process, while Hyperliquid’s documentation allowed the deployer to halt trading, change open-interest limits or settle the market. The operator had not published its final incident report when the July 28 coverage appeared.
