Payward Sets Sights on Launching On‑Chain Perpetual Futures for U.S. Users via Hyperliquid

Payward, the parent company behind the well‑known cryptocurrency brokerage Gemini, has announced an ambitious plan to bring on‑chain perpetual futures to its U.S. client base by leveraging the Hyperliquid protocol.

The move follows Payward’s recent $550 million acquisition of Bitnomial, a U.S.‑focused digital‑asset brokerage that already holds a suite of licenses and a robust compliance infrastructure. By integrating Bitnomial’s regulatory standing with Hyperliquid’s high‑performance, decentralized trading engine, Payward hopes to become the first fully registered U.S.

exchange to offer a native on‑chain futures market. ### Background on Payward and Gemini Payward was founded in 2014 and quickly gained prominence through its Gemini exchange, which positioned itself as a compliant, security‑first platform for retail and institutional investors. Over the years, Gemini has expanded its product lineup to include spot trading, custody services, and a limited set of derivatives.

However, the company has historically been constrained by U.S. securities regulations that limit the scope of leveraged products it can provide to retail customers.

This regulatory landscape has prompted Payward to explore alternative structures that can deliver sophisticated trading instruments while remaining within the bounds of the law. ### The Bitnomial Acquisition In early 2024, Payward completed the purchase of Bitnomial for $550 million. Bitnomial is a New York‑based brokerage that holds a New York State BitLicense, a Federal Reserve charter, and a suite of other state‑level approvals that allow it to operate a full suite of crypto‑related services, including futures, options, and over‑the‑counter (OTC) trades. The acquisition gives Payward immediate access to a licensed entity that can serve U.S.

customers with a broader range of derivative products, sidestepping some of the regulatory hurdles that have limited Gemini’s own offerings. ### Why Hyperliquid?

Hyperliquid is a next‑generation, layer‑2 blockchain protocol specifically designed for high‑throughput, low‑latency trading of crypto assets. Its architecture combines order‑book transparency with on‑chain settlement, enabling traders to execute perpetual contracts without relying on traditional off‑chain clearing houses. The protocol’s smart‑contract framework supports automated market‑making, liquidations, and funding rate calculations directly on the chain, which reduces counterparty risk and improves auditability.

For Payward, Hyperliquid presents several strategic advantages: 1. **Regulatory Compatibility**: Because the futures contracts are settled on‑chain, the exchange can argue that the product is a decentralized financial instrument rather than a traditional securities contract, potentially easing compliance burdens. 2.

**Speed and Scalability**: Hyperliquid’s consensus mechanism can process thousands of transactions per second, ensuring that price feeds and order execution remain competitive with centralized exchanges. 3.

**Transparency**: All trades, positions, and funding payments are recorded immutably on the blockchain, providing an unprecedented level of visibility for regulators, auditors, and users alike. 4. **Liquidity Aggregation**: The protocol can integrate liquidity from multiple market makers and other DeFi platforms, creating deeper order books and tighter spreads for traders. ### The Product: On‑Chain Perpetual Futures Perpetual futures are derivative contracts that allow traders to speculate on the price movement of an underlying asset without an expiry date.

They are typically funded periodically to keep the contract price aligned with the spot market. By offering these contracts on Hyperliquid, Payward aims to deliver a product that mirrors the functionality of traditional futures while leveraging the benefits of blockchain technology.

Key features of the planned offering include: - **Leverage Options**: Traders will be able to select leverage levels ranging from 2x up to 10x, depending on the asset and market conditions. - **Multi‑Asset Support**: Initial launch will focus on major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and a curated selection of stablecoins, with the roadmap expanding to include altcoins and tokenized equities. - **Risk Management Tools**: Built‑in stop‑loss, take‑profit, and auto‑liquidation mechanisms will protect both the platform and its users from extreme market volatility. - **Compliance Controls**: Integrated KYC/AML checks, transaction monitoring, and real‑time reporting will ensure that the platform adheres to U.S.

anti‑money‑laundering statutes and the Commodity Futures Trading Commission (CFTC) requirements. ### Regulatory Pathway and Challenges While Hyperliquid’s decentralized nature offers a compelling argument for regulatory leniency, Payward is taking a cautious approach.

The company plans to file a series of applications with the CFTC and the Securities and Exchange Commission (SEC) to obtain explicit clearance for its on‑chain futures products. By operating through Bitnomial’s existing licenses, Payward hopes to demonstrate that it maintains robust supervisory controls, even though the underlying technology is decentralized. Potential challenges include: - **Interpretation of “Security”**: Regulators may still view perpetual futures as derivatives that fall under the Commodity Exchange Act, requiring registration as a futures commission merchant (FCM) or a designated contract market (DCM).

- **Consumer Protection**: The U.S. has heightened scrutiny over leveraged crypto products due to concerns about retail investor losses. Payward will need to implement strict margin requirements and educational disclosures.

- **Inter‑Agency Coordination**: Aligning the expectations of the CFTC, SEC, and state regulators (especially New York’s Department of Financial Services) will be a complex, multi‑jurisdictional effort. ### Market Impact and Competitive Landscape If successful, Payward’s Hyperliquid‑based perpetual futures could reshape the U.S.

crypto derivatives market. Currently, only a handful of platforms—such as Binance.US, Kraken, and CME—offer futures to American users, and most of those products are either limited in leverage or require users to trade on offshore entities. Payward’s approach promises a domestically regulated, on‑chain solution that could attract both retail traders seeking higher leverage and institutional players looking for transparent, audit‑ready contracts. Competitors may respond by accelerating their own blockchain‑based derivative initiatives or by seeking partnerships with other layer‑2 protocols.

However, Payward’s early‑mover advantage, combined with Gemini’s brand reputation for security and compliance, positions it favorably to capture a sizable share of the market. ### Timeline and Future Outlook Payward has outlined a phased rollout plan: 1. **Q4 2024 – Prototype Testing**: Internal testing of Hyperliquid integration, stress‑testing of order‑book performance, and pilot runs with a limited group of accredited investors.

2. **Q1 2025 – Regulatory Filings**: Submission of formal applications to the CFTC and SEC, accompanied by detailed risk‑management frameworks. 3. **Q2 2025 – Public Beta**: Launch of a beta version for U.S.

retail customers who have completed enhanced KYC, with a focus on BTC and ETH perpetual contracts. 4.

**Q4 2025 – Full Launch**: Expansion to additional assets, full compliance certification, and marketing campaign highlighting the on‑chain nature of the product. Looking ahead, Payward envisions extending the Hyperliquid protocol beyond futures to include options, synthetic assets, and even tokenized real‑world securities. By establishing a modular, blockchain‑native infrastructure, the company aims to stay at the forefront of the evolving crypto‑finance ecosystem while maintaining the regulatory rigor required for U.S.

markets. In summary, Payward’s strategic use of the Bitnomial acquisition and the Hyperliquid protocol signals a bold step toward delivering sophisticated, on‑chain derivative products to American traders. The initiative blends cutting‑edge technology with a compliance‑first mindset, potentially setting a new standard for how regulated exchanges can operate in the decentralized finance space.