Regulatory Roundup #22

Summary

The White House puts offshore perpetuals venues on the regulatory agenda, though what “onshore” would actually mean, and the CME v CFTC suit over whether a perpetual is a future or a swap, both remain unresolved. Elsewhere, the SEC proposed Regulation Crypto Assets, its first bespoke token-offering regime, Austria published its first final MiCAR penalty, the FCA paused its HTX case and proposed a higher starting point for serious market-abuse penalties, and Japan created a dedicated crypto and stablecoin supervisory division.

🔦 Spotlight

Hyperliquid’s route onshore, and what it would actually take

On 19 August, President Trump told a White House gathering of crypto and traditional-finance executives that CFTC Chair Michael Selig was “working to bring Hyperliquid into the United States in a fully compliant and legal fashion.” The room included executives from Coinbase, Kraken, Robinhood, Nasdaq and Intercontinental Exchange, alongside SEC Chair Paul Atkins and Selig himself. HYPE rose by more than 10% within hours, and the listed Hyperliquid Strategies vehicle gained around 30% on the day. Regulatory mood music has rarely been so reasonably priced.

What the President did not add any color around was what an onshore Hyperliquid would look like, which registrations it would need, or that the CFTC had approved anything. The following day the CFTC held the inaugural meeting of its 43-member Innovation Advisory Committee, the published agenda of which covered crypto, artificial intelligence and prediction markets in general terms rather than Hyperliquid or perpetual futures specifically.

Hyperliquid, in its native form, is an awkward guest for US derivatives law. It is a decentralized perpetual-futures exchange running on its own layer-one chain, with an on-chain central limit order book rather than the automated market maker most DeFi venues use. It settles trades on-chain, identifies users only by wallet address, runs no traditional KYC, offers leverage up to 40x, and currently geoblocks the United States alongside sanctioned jurisdictions such as Iran, North Korea and Crimea. This is not a fringe venue. It handled more than $633 billion in combined perps and spot volume in the first quarter of 2026 and holds roughly a third of the on-chain perps market. The thing the White House is proposing to admit is precisely the sort of anonymous, always-on, high-leverage venue US derivatives law was built to keep on a short lead.

That is why the US incumbents had a head start. CME and ICE spent the spring warning the CFTC and Capitol Hill that Hyperliquid’s anonymous round-the-clock perpetuals could distort commodity benchmarks, singling out oil products, and pressing for mandatory registration, customer identification, trade surveillance and full market oversight. The lobbying has a harder edge than usual because the same contest is already in court. In June (as covered in Issue 20), CME sued the CFTC and Selig over the agency’s approval of Kalshi’s BTCPERP contract and its clearing of Coinbase to route US customers to its offshore Deribit affiliate. 

CME’s argument is that the Commodity Exchange Act defines a futures contract by reference to a delivery or expiry date. Perpetual contracts have neither, and instead use periodic funding payments to hold price to spot, so they should be regulated as swaps under Dodd-Frank. The CFTC called the suit “frivolous”, which is a word regulators generally reserve for litigation they expect to lose slowly. However the federal court in Washington comes down, it will hopefully clarify what a perpetual is, legally, before it decides who gets to offer one. 

Regulated US exposure to the token, if not the venue, already exists. Coinbase Derivatives self-certified its HYPE Perp Style Futures contract in May and began trading it in June; Bitwise’s BHYP and 21Shares’ THYP started in May, with Grayscale’s HYPG following on 3 June. A compliant venue is a harder problem than a compliant wrapper, and Hyperliquid’s own answer is not to open its KYC-free front end to Americans, which nobody claims would be lawful, but to treat the chain as neutral infrastructure that regulated intermediaries plug into. HIP-3 is live on mainnet and permits builder-deployed markets. An optional address-allowlist capability has also appeared on testnet; paired with off-chain onboarding, it could potentially support a restricted deployment, but it is not yet a publicly approved US regulatory route. In that model a US broker completes its onboarding obligations and routes verified flow to the underlying engine, or a deployer registers as the exchange and wears the regulatory burden directly. Hyperliquid has staffed for the argument, opening a Washington policy center in February under crypto lawyer Jake Chervinsky.

Nothing is yet resolved. Hyperliquid has engaged with CFTC staff, but no public application, registration decision or approval has been announced, and the CME suit will have to pin down what a perp actually is before any onshore venue has firm ground to stand on. The shape of any onshore version is still open too: a registered US affiliate, a broker routing KYC’d flow to the underlying engine, and a third-party HIP-3 deployment are three different structures, each with its own counterparty, custody and conduct questions. Endorsed and available remain separate concepts, but what one of my Talos colleagues calls "the perpification of everything" just received a handy boost.

🌎 Global Developments

🇺🇸 United States

SEC proposes Regulation Crypto Assets

On 18 August the SEC proposed Regulation Crypto Assets, its first bespoke securities-offering regime for digital assets, published in the Federal Register on 21 August with comments due 20 October. It is a proposal, not a live exemption, and its perimeter is narrow: it applies where a crypto asset is not itself a security but was offered as part of an investment contract under which the issuer promised to build something. It offers two capital-raising routes, a one-time startup exemption of up to $5 million over four years and a Regulation A-style fundraising exemption of up to $20 million (Tier 1) or $75 million (Tier 2) over twelve months, with the larger route limited to US-organized issuers and carrying SEC qualification and ongoing-reporting obligations.

The more consequential piece is a conditional safe harbor from the term “investment contract”, available whether or not the issuer used either exemption, which makes it relevant to tokens issued years ago. An issuer that has completed or permanently ceased its promised managerial efforts can file a Form TR certification to end the investment contract while the token continues to trade, with the SEC able to challenge that certification after the fact rather than approving it up front. The proposal would also pre-empt state registration for covered offerings and certain secondary trades, which is likely to draw state-regulator attention during the comment period. The SEC’s own paperwork estimates, roughly 475 safe-harbor filings a year against 130 new offerings, point to a first visible effect that is a clean-up of legacy token status rather than a wave of fresh US issuance.

🇪🇺 European Union 

Austria publishes its first final MiCAR penalty

On 14 August, Austria’s Financial Market Authority published the first legally final MiCAR penal order it has made public: a €70,000 fine against Bitpanda GmbH. The FMA cautioned against treating the case as a special precedent. Bitpanda published a marketing communication before its crypto-asset whitepaper, and the communication breached Article 7 because it lacked the mandatory disclaimer that no regulator had approved it and omitted the required contact details. Separately, under Article 8, Bitpanda had not submitted the whitepaper to the FMA at least 20 working days before publication. The FMA closed the case under its accelerated procedure. Bitpanda’s CASP authorization, granted in April 2025, is unaffected.

The penalty covers three routine controls: whitepaper notification, the sequencing of marketing communications, and mandatory disclaimer and contact language. For CASPs operating across several member states those controls often sit with different teams, and the failure here was one of sequence and evidence rather than substance: legal approval, publication workflows and marketing templates that were not joined up, with nothing on file to show each step had happened in the right order. Proof that under MiCAR, as in life, it is the admin that gets you.

🇬🇧 United Kingdom

FCA pauses its HTX case for settlement talks

The FCA sued HTX, formerly Huobi, in the High Court in October 2025, alleging that the exchange had marketed crypto services to UK consumers without authorization. It was the regulator’s first case of this kind against an offshore platform. Eight months on, the case potentially looks set to end with a quiet word in a corridor. On 25 June 2026, an order of Chief Master Shuman paused the proceedings. On 24 August, Master Marsh stayed proceedings until 8 September 2026 to allow the FCA and Huobi Global to attempt a settlement. If no agreement is reached, proceedings will resume.

The case is worth watching because it tests the financial-promotions regime against an offshore platform that did not seek UK authorization. Particularly pertinent ahead of the authorization gateway opening on 30 September and the new regime taking effect in October 2027.

FCA proposes a higher starting point for serious market-abuse penalties

The FCA’s CP26/19, open for consultation from 15 June to 10 August, proposes raising the Step 2 starting point for the most serious individual market-abuse cases, those assessed at seriousness level 4 or 5, from £100,000 to £150,000. This would be the first time that the figure has moved since 2010, showing that inflation eventually gets to us all. The figure could still be reduced for mitigation, proportionality, settlement or serious financial hardship, so it is a starting point rather than a guaranteed floor. The same paper would extend the Decision Procedure and Penalties Manual to the new cryptoasset market-abuse regime under the Cryptoassets Regulations 2026 and reflect the FCA’s powers under that regime.

The proposed DEPP amendments connect the new cryptoasset market-abuse regime to the FCA’s existing penalty methodology. Until the consultation is finalized, the £150,000 figure remains provisional. 

🇯🇵 Japan

Japan’s FSA creates a dedicated crypto and stablecoin division

On 7 August, Japan’s Financial Services Agency carried out its first major internal reorganization in eight years. One of the changes was the creation of a Crypto Assets and Stablecoin Division inside the new Asset Management and Insurance Supervision Bureau. The division contains three units: a crypto-market monitoring room, an innovation-promotion room and a digital-payment planning room. It formalizes work previously handled within the Comprehensive Policy Bureau’s Risk Analysis Division.

The change follows the Diet’s passage of the FIEA amendment on 15 July. The amendment shifts crypto trading towards securities-style conduct rules and raises the maximum penalty for operating an unlicensed exchange from three years to ten. Detailed requirements on custody and market conduct, and the treatment of staking and decentralized trading, will depend on subordinate FSA rules. The new division is therefore likely to be the main point of contact for firms tracking how the legislation will operate in practice.

🇵🇰 Pakistan

Pakistan opens VASP licensing with a short fuse for incumbents

On 21 August, the Pakistan Virtual Assets Regulatory Authority (PVARA) notified its licensing regulations and opened its application portal under the Virtual Assets Act 2026. It is the country's first full authorization regime for virtual-asset firms, and it is broad. It covers exchanges, custody, lending, derivatives, asset management, token issuance and mining, and requires local incorporation under the Companies Act 2017, with branch offices explicitly insufficient, a PVARA licence, and minimum paid-up capital of between PKR 100 million and PKR 1 billion depending on the activity. Licensed providers must segregate client assets and meet governance, cybersecurity and AML requirements. The route runs through a no-objection certificate, Financial Monitoring Unit registration and incorporation before the full licence application.

Incumbents have the most urgent pending deadline. Under Section 70, Transitional Persons (firms already operating on or before 5 March 2026) must file for a no-objection certificate by 5 September or stop trading. Trading past that date without having applied is an offence. That is barely a fortnight from the rules landing to the deadline, and only for the first step of several. Binance and HTX took preliminary approvals back in December 2025, so the larger platforms are already inside the process. The short turnaround risks catching out anyone who thought there was more time.

🔎 Things to Watch 

• 🇺🇸 CLARITY Act: cloture on the motion to proceed ripens 15 September at 2:15pm ET; still needs 60 votes, and ethics provisions remain unresolved. The Senate returns from recess with roughly one Senate week before that vote.
• 🇺🇸 SEC Regulation Crypto Assets: proposed 18 August, published in the Federal Register 21 August, comments due 20 October. 
• 🇺🇸 GENIUS Act rulemaking: the joint FinCEN/OCC/Fed/FDIC/NCUA customer-identification NPRM comment window closed 21 August on schedule. No extension, no final rule yet; expected in 2027 with a further implementation runway once issued.
• 🇺🇸 California DFAL: the licence requirement has applied since 1 July. The DFPI's implementing regulations, rewritten after the Office of Administrative Law disapproved an earlier version on 12 May, were approved and took effect on 29 June 2026.
• 🇺🇸 DTCC Tokenization Service: full launch still targeted for October 2026, unchanged since Issue 21.
• 🇪🇺 MiCA: transitional period expired EU-wide 1 July, no extension. Poland remains the only member state without implementing legislation, unchanged since President Nawrocki's third veto on 11 June.
• 🇪🇺 EU Commission MiCA review: targeted consultation deadline unchanged at 30 September.
• 🇪🇺 EU Markets Integration and Supervision package: ECOFIN gave a political commitment on 10 July to reach a Council negotiating position by October 2026; the next ECOFIN sits 9 October.
• 🇬🇧 FCA: authorization gateway opens 30 September, closes 28 February 2027, ahead of the regime going live 25 October 2027. DeFi decentralization guidance and the promised admissions-deferral consultation are both still pending.
• 🇬🇧 Bank of England systemic stablecoin Code: consultation on the draft Code closes 22 September; final Code due by end of 2026.
• 🇬🇧 HM Treasury Wholesale Digital Markets Champion: feedback on the Woolard report closes 4 September; Action Group membership and chairs are due to be finalized in September, per the report itself.
• 🇯🇵 Japan: FIEA amendment enacted 15 July; a dedicated FSA division now exists to write the subordinate rules (see above). The 20% flat crypto tax rate starts 1 January 2028 at the earliest, tied to FIEA's commencement date, which is still unset.
• 🇦🇺 Australia: ASIC's AFSL lodgement deadline is 30 September; the Digital Assets Framework Act itself commences 9 April 2027.
• 🇰🇷 South Korea: FSC, Bank of Korea and the ruling party have set a September target to reintroduce the Digital Asset Framework Act, with fortnightly milestones promised. The core dispute, whether banks must hold 51% of any won-stablecoin issuer, remains unresolved between the FSC and the Bank of Korea.
• 🇹🇼 Taiwan: the Virtual Asset Service Act was promulgated on 22 July 2026. Only the Executive Yuan's commencement date remains outstanding.
• 🇵🇰 Pakistan: PVARA notified operational VASP licensing regulations on 21 August. Transitional Persons, providers operating on or before 5 March 2026, must submit an NOC application by 5 September or cease operations.

Coming into view: 

• 🇺🇸 CME v. CFTC: the ruling will help determine whether onshore perpetual contracts belong in the futures or swaps framework. That will affect Hyperliquid’s potential US route, although other operating and compliance requirements would remain.
• 🇭🇰 Hong Kong: Anchorpoint’s HKD-pegged stablecoin began phase-one beta access on 12 August, the first live product test under Hong Kong’s new stablecoin licensing regime.

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