Payward, the corporate entity behind the well‑known cryptocurrency brokerage platform Kraken, has announced an ambitious plan to bring on‑chain perpetual futures to its U.S. client base by leveraging the Hyperliquid protocol. This move follows Payward’s recent $550 million acquisition of Bitnomial, a U.S.‑focused digital‑asset brokerage and clearing firm.

By integrating Bitnomial’s regulatory infrastructure and compliance expertise with Hyperliquid’s high‑performance, decentralized trading technology, Payward hopes to become the first U.S.‑registered exchange to offer a fully on‑chain perpetual futures market. ### Background on Payward and the Bitnomial Acquisition Payward has long positioned itself as a global leader in cryptocurrency services, operating under the Kraken brand in more than 190 jurisdictions.

In recent years, the firm has pursued a dual strategy of expanding its product suite—adding futures, margin trading, and staking services—while simultaneously strengthening its regulatory posture in key markets such as the United States, Europe, and Japan. The acquisition of Bitnomian in early 2024 was a strategic step in that direction.

Bitnomial, founded in 2019, built a reputation for providing a compliant, broker‑dealer‑grade clearing solution for digital‑asset derivatives. Its licensing portfolio includes a New York State Department of Financial Services (NYDFS) BitLicense, a Chicago‑based Commodity Futures Trading Commission (CFTC) registration, and a suite of state‑level money‑transmitter licenses. By purchasing Bitnomial for $550 million, Payward secured not only a ready‑made compliance framework but also a seasoned team of compliance officers, legal counsel, and technology engineers familiar with the intricacies of U.S. securities and commodities law.

The acquisition also gave Payward direct access to Bitnomial’s proprietary order‑matching engine, which has been optimized for low‑latency execution of high‑volume derivative trades. This technology stack, when combined with Payward’s existing liquidity pools and market‑making relationships, creates a robust foundation for launching new derivative products that meet both performance expectations and regulatory requirements. ### Why Hyperliquid? Hyperliquid is a next‑generation, layer‑2 scaling solution built on top of the Ethereum blockchain.

It employs a combination of zero‑knowledge rollups and optimistic rollup techniques to achieve sub‑second finality for complex derivative contracts while preserving the security guarantees of the underlying Ethereum network. The protocol’s architecture allows developers to create perpetual futures contracts that settle entirely on‑chain, eliminating the need for off‑chain custodial accounts or centralized clearing houses.

This on‑chain settlement model reduces counterparty risk, enhances transparency, and provides users with verifiable proof of trade execution and settlement. For Payward, Hyperliquid offers several compelling advantages: 1. **Speed and Scalability** – Hyperliquid can process tens of thousands of transactions per second, a critical factor for high‑frequency futures trading where latency can directly affect profitability. 2.

**Security** – By anchoring settlement on Ethereum’s consensus layer, the protocol inherits the network’s robust security model, protecting users from many of the systemic risks associated with traditional centralized exchanges. 3. **Regulatory Compatibility** – Hyperliquid’s design includes built‑in compliance hooks, such as on‑chain identity verification and transaction tagging, which can be leveraged to satisfy U.S.

reporting obligations under the CFTC and the Securities and Exchange Commission (SEC). 4. **Interoperability** – The protocol supports a wide range of ERC‑20 tokens as collateral, enabling Payward to offer futures contracts on popular assets like Bitcoin (WBTC), Ether (WETH), and emerging stablecoins without requiring separate custody solutions.

### The Vision for U.S. On‑Chain Perpetual Futures Payward’s proposed product will allow U.S. traders to enter perpetual futures positions on major cryptocurrencies without leaving the blockchain environment. Unlike traditional futures that settle in cash or require periodic funding payments, perpetual futures on Hyperliquid use a continuous funding rate mechanism that aligns the contract price with the underlying spot market.

This mechanism is encoded directly into the smart contract, ensuring that funding payments are automatically calculated and transferred between long and short positions each funding interval. Key features of the anticipated offering include: - **Regulated Access** – All U.S.

participants will be required to undergo Know‑Your‑Customer (KYC) and Anti‑Money‑Laundering (AML) checks in line with Bitnomial’s existing compliance framework. The on‑chain identity layer will be linked to off‑chain verification processes, creating a seamless bridge between decentralized execution and centralized oversight. - **Margin Flexibility** – Traders will be able to post collateral in a variety of approved assets, with the smart contract automatically managing margin requirements, liquidation thresholds, and position sizing. - **Transparent Order Book** – While the order‑matching engine remains off‑chain for performance reasons, trade data will be periodically committed to the Hyperliquid rollup, providing an immutable audit trail that regulators and users can inspect.

- **Insurance and Risk Management** – Payward plans to allocate a portion of the acquisition proceeds to a risk‑fund reserve that will backstop extreme market events, similar to the insurance pools employed by traditional futures exchanges. ### Regulatory Landscape and Compliance Strategy Launching an on‑chain derivatives product in the United States presents a complex regulatory environment. The CFTC classifies cryptocurrency futures as commodity derivatives, subjecting them to stringent reporting, position‑limit, and market‑surveillance requirements. Meanwhile, the SEC has signaled that certain token‑based contracts could fall under securities law if they meet the Howey test.

Payward intends to navigate this landscape by: - **Registering the product as a Designated Contract Market (DCM)** with the CFTC, leveraging Bitnomial’s existing registration and its experience in filing required reports such as the CFTC’s Large Trader Reporting (LTR) and the Daily Transaction Report (DTR). - **Implementing on‑chain reporting mechanisms** that automatically generate the data feeds required for CFTC surveillance, ensuring that every trade, funding payment, and liquidation event is captured in real time. - **Cooperating with the SEC** to assess whether any of the underlying assets or contract specifications trigger securities regulations, and adjusting the product design accordingly. - **Maintaining a robust AML program** that monitors on‑chain transaction patterns for suspicious activity, using machine‑learning models trained on both on‑chain and off‑chain data sources.

### Market Impact and Competitive Positioning If successful, Payward’s Hyperliquid‑based perpetual futures could reshape the U.S. digital‑asset derivatives market in several ways: - **First‑Mover Advantage** – By being the inaugural U.S.‑registered exchange to offer a fully on‑chain futures product, Payward can capture early adopters seeking the security and transparency of blockchain settlement. - **Liquidity Migration** – Existing Kraken users who already trade spot and margin products may be inclined to transition to the new futures offering, bolstering liquidity and reducing reliance on offshore platforms. - **Catalyst for Innovation** – The integration of Hyperliquid’s technology could inspire other U.S.

exchanges to explore on‑chain solutions, potentially leading to a broader ecosystem of decentralized derivatives. - **Regulatory Benchmark** – Payward’s compliance framework may serve as a template for future on‑chain financial products, demonstrating that decentralized execution can coexist with rigorous regulatory oversight. ### Timeline and Next Steps Payward has outlined a phased rollout plan: 1.

**Prototype Development (Q4 2024)** – Finalize smart‑contract code, conduct security audits, and integrate Bitnomial’s KYC/AML pipelines. 2.

**Regulatory Filings (Q1 2025)** – Submit DCM registration, obtain necessary approvals from the CFTC, and engage with the SEC on any securities considerations. 3.

**Beta Launch (Q2 2025)** – Open the platform to a limited group of qualified U.S. traders for testing, feedback, and stress‑testing of the settlement engine.

4. **Public Launch (Q3 2025)** – Roll out the full product to all eligible U.S. customers, accompanied by educational resources and a marketing campaign highlighting the security and transparency benefits of on‑chain perpetual futures.

### Conclusion Payward’s strategic combination of the Bitnomial acquisition and the Hyperliquid protocol positions the company at the forefront of a new era in U.S. cryptocurrency derivatives. By delivering a regulated, on‑chain perpetual futures market, Payward aims to offer traders the speed and efficiency of decentralized technology while satisfying the stringent compliance standards demanded by U.S.

regulators. If the plan unfolds as intended, it could set a precedent for how traditional financial institutions integrate blockchain‑based products, potentially unlocking a wave of innovation across the broader digital‑asset landscape.