Payward, the corporate entity behind the popular cryptocurrency brokerage platform Kraken, has announced an ambitious plan to broaden its product suite for American customers by offering on‑chain perpetual futures contracts that will run on the Hyperliquid protocol. This strategic move follows the company’s recent $550 million acquisition of Bitnomial, a well‑established U.S. futures brokerage that specializes in regulated derivatives trading. By integrating Bitnomial’s licensed infrastructure with the cutting‑edge technology of Hyperliquid, Payward aims to become the first U.S.‑registered exchange to deliver fully on‑chain derivatives markets that meet both the rigorous standards of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) and the performance expectations of modern crypto traders.
### Background: The Bitnomial Purchase In early 2024, Payward closed a $550 million deal to acquire Bitnomial, a New York‑based futures broker that holds the necessary registrations to operate as a designated contract market (DCM) under CFTC oversight. Bitnomial’s portfolio includes a range of traditional futures products—such as commodities, equity indices, and interest‑rate contracts—offered to institutional and qualified retail clients. The acquisition gave Payward immediate access to a fully compliant regulatory framework, a seasoned compliance team, and a suite of risk‑management tools that are essential for operating derivatives markets in the United States.
The purchase was not merely a financial transaction; it represented a deliberate effort by Payward to bridge the gap between the conventional, highly regulated world of futures trading and the fast‑moving, decentralized realm of crypto assets. By inheriting Bitnomial’s licenses, Payward can sidestep the lengthy and uncertain process of applying for new registrations, allowing it to focus on product development and market launch. ### Why Hyperliquid? Hyperliquid is a relatively new layer‑1 blockchain protocol that has been engineered specifically for high‑throughput, low‑latency trading of decentralized financial (DeFi) instruments.
Its architecture combines a novel consensus mechanism with an order‑book design that mirrors the speed and reliability of traditional centralized exchanges while preserving the trustless, permissionless qualities of blockchain technology. Key technical advantages include: 1. **Sub‑millisecond finality** – Transactions settle almost instantly, a critical factor for perpetual futures where price movements can be rapid.
2. **Scalable throughput** – The network can process tens of thousands of trades per second, reducing congestion and slippage. 3.
**On‑chain risk controls** – Margin requirements, liquidation mechanisms, and funding rates are encoded directly into smart contracts, ensuring transparent and enforceable risk management. 4. **Interoperability** – Hyperliquid supports cross‑chain asset bridges, enabling users to trade futures on a variety of underlying tokens without leaving the ecosystem.
By selecting Hyperliquid, Payward is positioning itself at the intersection of regulatory compliance and cutting‑edge technology. The protocol’s on‑chain nature satisfies the growing demand from traders for verifiable, tamper‑proof market data, while its performance characteristics meet the operational standards expected by professional investors. ### The Product: On‑Chain Perpetual Futures Perpetual futures are derivative contracts that allow traders to speculate on the price of an underlying asset without an expiration date. Unlike traditional futures, perpetual contracts use a funding rate mechanism to tether the contract price to the spot price of the asset.
Payward’s on‑chain version will replicate this model, but with the added benefits of blockchain transparency: - **Immutable contract terms** – All contract specifications, including leverage limits, funding intervals, and settlement rules, will be stored on the Hyperliquid ledger, making them auditable by anyone. - **Automated liquidations** – Smart contracts will automatically trigger margin calls and liquidations when a trader’s collateral falls below required thresholds, reducing counter‑party risk. - **Real‑time price feeds** – Payward will integrate decentralized oracles to deliver up‑to‑the‑second price data, ensuring that funding rates and mark prices reflect market conditions accurately.
- **Regulated access** – Only users who have passed Payward’s KYC/AML checks and meet the eligibility criteria set by Bitnomial’s DCM license will be permitted to trade, aligning the platform with U.S. securities law.
The offering will initially focus on a curated list of high‑liquidity crypto assets—such as Bitcoin (BTC), Ether (ETH), and a selection of stablecoins—before expanding to include tokenized versions of traditional commodities and equity indices. Leverage options are expected to range from 2x up to 10x, with risk‑management safeguards that cap exposure for retail participants. ### Regulatory Considerations Operating a futures exchange in the United States requires strict adherence to CFTC regulations, including reporting, record‑keeping, and capital‑adequacy standards. By leveraging Bitnomial’s existing DCM registration, Payward can launch the Hyperliquid‑based markets under an established regulatory umbrella.
The company has indicated that it will file the necessary amendments to reflect the new on‑chain product line, and it will continue to cooperate with the CFTC’s Surveillance Division to monitor market integrity. Moreover, Payward plans to engage with the SEC to ensure that any tokenized assets used as underlying references do not fall afoul of securities classification rules.
The firm’s legal team is developing a framework that treats on‑chain perpetual futures as commodity derivatives, a classification that aligns with existing CFTC guidance for crypto‑related contracts. ### Market Impact and Competitive Landscape If successful, Payward’s launch could set a precedent for how regulated U.S. exchanges adopt decentralized infrastructure. Competitors such as CME Group and Bakkt have explored blockchain‑based settlement for futures, but none have yet combined full on‑chain execution with a U.S.
futures license. Payward’s approach may pressure other crypto‑centric platforms—like Binance US, Coinbase, and Kraken’s own rivals—to pursue similar regulatory‑compliant, on‑chain solutions. From a user perspective, the hybrid model offers several advantages: the confidence of trading on a regulated exchange, the speed and transparency of decentralized technology, and the ability to access leverage without the latency typically associated with traditional clearinghouses. Institutional investors, hedge funds, and sophisticated retail traders are likely to view the offering as a bridge between legacy finance and the emerging DeFi ecosystem.
### Timeline and Future Outlook Payward has outlined a phased rollout plan. The first phase, slated for Q4 2024, will involve a closed‑beta test with a limited group of qualified traders to validate the smart‑contract logic, funding rate calculations, and liquidation processes.
Following regulatory sign‑off and successful stress‑testing, a public launch is projected for early 2025, with an expanded roster of assets and higher leverage tiers. Looking ahead, the company envisions extending the Hyperliquid integration beyond perpetual futures to include options, swaps, and even tokenized securities.
By continuously iterating on its on‑chain infrastructure while maintaining compliance, Payward aims to cement its position as a pioneer in the regulated crypto‑derivatives space, offering American investors a seamless, secure, and innovative trading experience. In summary, Payward’s strategic acquisition of Bitnomial combined with its partnership with the Hyperliquid protocol positions the firm to become the first U.S.‑registered exchange to deliver on‑chain perpetual futures. The initiative blends regulatory rigor with blockchain efficiency, promising a new era of transparent, high‑performance derivatives trading for U.S. market participants.