Hyperliquid forms lobbying group to shape DeFi derivatives regulation

Why it matters: Hyperliquid, with an annual trading volume of $2.95 trillion and a 70% market share in DEX perpetual futures, has established the "Hyperliquid Policy Center," a policy advocacy group, in Washington D.C. The operating funds consist of 1 million HYPE tokens (approximately $29M). Jake Chervinsky, former Head of Policy at the Blockchain Association, has been appointed CEO. This marks the first instance of a DeFi protocol itself establishing a lobbying organization funded by its own tokens. Amidst the ongoing deliberation of the CLARITY Act in the U.S. Congress, whose provisions will determine the legality of DeFi as a whole, this is a structural move attempting to shift from being "regulated" to "writing the regulations."

📝 SUMMARY: Hyperliquid, with an annual trading volume of $2.95 trillion and a 70% market share in DEX perpetual futures, has established the "Hyperliquid Policy Center," a policy advocacy group, in Washington D.C.

What Happened

• February 19, 2026 — Hyperliquid established the "Hyperliquid Policy Center" in Washington D.C. as a non-profit research and advocacy organization.
• Operating Funds — 1 million HYPE tokens (approx. $29M = approx. 4.3 billion JPY at the time of announcement) contributed.
• CEO Appointment — Jake Chervinsky, Esq. Former Head of Policy at the Blockchain Association, former Head of Legal at venture fund Variant.
• Executive Team — Policy Counsel: Brad Burke, formerly of Sullivan & Cromwell; Policy Director: Sarah Gazzal, formerly of Variant.
• Hyperliquid Achievements — Fully on-chain perpetual futures exchange on a Layer 1 blockchain. Cumulative trading volume of $2.95 trillion in 2025, approx. 70% DAU share in the DEX perpetual futures market.
• HYPE Market Cap — Approx. $7.1B (16th largest in overall crypto assets). Currently down 49% from ATH of $59.37.
• U.S. Congress — CLARITY Act (stablecoin regulatory framework) is under deliberation. The "intermediary liability" clause could affect the legality of DeFi.
• Industry as a whole — Crypto industry lobbying expenditures exceeded $2.4B in 2024 (entire U.S. election cycle). A scale comparable to the pharmaceutical and oil industries.

Overall Picture

Historical Context

The political influence of the crypto industry has changed dramatically over the past five years.

Before 2020, crypto lobbying was almost non-existent. The industry grew by "avoiding" regulation. The turning point was the FTX collapse in 2022. Sam Bankman-Fried's political donation scandal destroyed industry trust, but at the same time, it instilled in the entire industry the realization that "survival is impossible without political engagement."

In 2024, the crypto industry, centered around Fairshake PAC, made over $2.4B in political donations, contributing to the election of several crypto-friendly candidates. Coinbase CLO Paul Grewal led SEC litigation, and a16z's Chris Dixon published policy proposals.

However, all previous lobbying efforts have been led by CeFi companies (Coinbase, Ripple) or VC funds (a16z Crypto). This is the first time a DeFi protocol itself has established a lobbying organization with its own tokens, positioning it as the first step in a "CeFi → DeFi" power shift in crypto political participation.

Another important context is the changing regulatory environment under the Trump administration. A shift away from the "regulation = litigation" approach of former SEC Chair Gensler is underway, with Coinbase and Kraken lawsuits being withdrawn, and a crypto-friendly regulatory environment beginning to form. However, a legislative framework does not yet exist. Hyperliquid's strategy is to write the rules during this "regulatory vacuum."

Stakeholder Map

Structure Seen Through Data

• $2.95 trillion — Hyperliquid's cumulative trading volume in 2025
• 70% — Hyperliquid's DAU share in the DEX perpetual futures market
• $29M — Policy Center operating funds (1 million HYPE tokens)
• $7.1B — HYPE token market cap (16th largest in overall crypto assets)
• $2.4B+ — Crypto industry's 2024 lobbying expenditures (entire U.S. election cycle)
• -49% — HYPE price decline from ATH ($59.37)

The delta: Superficially, this appears to be political activity by a DeFi project, but in essence, it's the emergence of a "structure where a token economy self-generates political influence." If the price of HYPE rises, lobbying funds increase, and if successful lobbying leads to DeFi-favorable regulations, the HYPE price will rise further——this feedback loop did not exist in traditional corporate lobbying.

Reading Between the Lines — What the News Isn't Saying

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NOW PATTERN

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Regulatory Capture × Platform Power

DeFi protocols are attempting to shift to designing regulations with their own tokens. Those who write the rules control the game.

Regulatory Capture: DeFi Shifts from "Regulated" to "Designing Regulations"

Regulatory Capture refers to the phenomenon where an industry exerts influence over regulators and legislatures to shape rules in its favor. Hyperliquid's move can be interpreted as the DeFi version of this dynamic.

This technology has the potential to become the foundation of the global financial system
— Jake Chervinsky, CEO, Hyperliquid Policy Center

Instead of existing regulatory frameworks premised on centralized intermediaries, rules specific to decentralized systems are needed.
— Chervinsky's policy advocacy stance

The contentious point of the CLARITY Act is "intermediary liability." Traditional financial regulations are premised on centralized intermediaries like banks, securities firms, and exchanges managing and monitoring customer transactions. However, DeFi protocols sometimes lack such administrators. Hyperliquid's perpetual futures trading is automatically executed via smart contracts, leaving the fundamental question of "who is subject to regulation" unresolved.

Banking industry lobbying groups (such as the ABA) argue that "existing financial regulations should also apply to DeFi," but applying them would render many DeFi protocols inoperable. Hyperliquid's investment of $29M to establish a lobbying organization is aimed at guiding the design of this "intermediary liability" clause in a direction favorable to DeFi.

While $29M does not match the lobbying budgets of a16z or Coinbase, the legitimacy of "DeFi protocol's own token funds" becomes a differentiating factor. This represents a structural shift where the regulated entity itself, rather than an industry representative, directly lobbies.

Platform Power: 70% Market Share Demands the "Right to Write Rules"

Given that Hyperliquid accounts for 70% of DAU in the perpetual futures DEX market, regulatory rules for DeFi derivatives directly impact Hyperliquid's business model. "Becoming a rule-maker" is synonymous with defending market share.

It's a critical time for policy discussions
— Hyperliquid Founder

Traditional crypto lobbying has been carried out by "centralized players and VC funds" such as Coinbase, Ripple, and a16z Crypto. Coinbase CLO Paul Grewal led SEC litigation, a16z's Chris Dixon published policy proposals, and Fairshake PAC raised election funds.

The establishment of the Hyperliquid Policy Center signifies the entry of "decentralized protocols themselves" into this lobbying structure. It is unprecedented for a DeFi protocol to establish a lobbying organization with its own tokens and appoint the former head of the industry's largest lobbying group as CEO.

If this move succeeds, other DeFi protocols (such as Uniswap, Aave, dYdX) are likely to follow suit. As a result, a structural shift in crypto industry lobbying power from "CeFi companies and VCs" to "DeFi protocols themselves" could occur.Intersection of Dynamics

Regulatory capture and platform power are inextricably linked in Hyperliquid's move.

The platform power of a 70% market share justifies entry into regulatory design. The logic that "it is irresponsible for the industry's largest player not to be involved in regulation" mirrors the historical structure of the banking industry's involvement in designing Basel regulations.

However, what is critically different is the feedback loop of "token → lobbying funds → favorable regulation → token price increase." In traditional corporate lobbying, the benefits of lobbying success were indirect (reflected in stock prices), but in a token economy, lobbying success is directly reflected in token prices. This structure makes the dynamics of regulatory capture more powerful than ever before.

A third dynamic, institutional degradation, is also at play. During former SEC Chair Gensler's tenure, the "regulation = litigation" approach became entrenched, and administrative guidance became dysfunctional. Under the Trump administration, SEC lawsuits were withdrawn, creating a "regulatory vacuum." Hyperliquid is attempting to write rules during this vacuum. Whether favorable rules can be established before this vacuum closes will determine the next decade for the entire DeFi industry.

History of Patterns

2008: Basel III — The Structure Where the Banking Industry Designed Its Own Regulations

After the 2008 financial crisis, the Basel Committee on Banking Supervision formulated Basel III regulations. However, lobbyists from major banks were deeply involved in the detailed design of the regulations, and numerous provisions favorable to banks were included in the calculation methods for capital adequacy ratios and the definition of liquidity requirements.

Jamie Dimon, CEO of JPMorgan, argued that "regulation is necessary, but involvement in its design is a natural right." As a result, Basel III functioned as "regulations protecting banks," ultimately strengthening the market share of major banks.

Structural similarities with the current case: Market dominators enter regulatory design and establish rules favorable to themselves. Hyperliquid's 70% share in perpetual futures DEX is structurally analogous to JPMorgan's dominance in the derivatives market.

2024: Fairshake PAC — The Year the Crypto Industry Bought Elections

In the 2024 U.S. election cycle, the crypto industry, centered around Fairshake PAC, spent over $2.4B on lobbying, helping to elect several crypto-friendly candidates. Coinbase, Ripple, and a16z Crypto were major funding sources.

This election cycle is seen as a turning point where "the crypto industry reached a critical mass of political influence." Lobbying on a scale comparable to the pharmaceutical and oil industries is no longer niche industry political activity.

Structural similarities with the current case: CeFi/VC-led lobbying succeeded in 2024. Hyperliquid's move is an attempt to transplant this successful model to "DeFi protocols themselves."

Pattern Revealed by History

The pattern revealed by history is clear: "When market dominators participate in regulatory design, regulations tend to reinforce the dominator's position."

Basel III protected major banks, and Fairshake PAC established the political standing of the crypto industry as a whole. If Hyperliquid's move follows this pattern, the CLARITY Act will be designed to recognize the autonomy of DeFi protocols, and Hyperliquid's 70% market share will be institutionally protected by regulation.

However, there are also risks. Basel III failed to solve the "Too Big to Fail" problem, creating a structure where regulatory capture preserved systemic risk. If the same happens with DeFi, a new problem of "Too Decentralized to Regulate" could emerge.

Future Outlook

Base — DeFi-specific rules partially established (Probability: 50-60%)

The stablecoin provisions of the CLARITY Act will pass, but regulation of DeFi derivatives will be postponed to a separate bill. Due to lobbying by the Hyperliquid Policy Center, the interpretation that "fully on-chain DEXs are exempt from traditional exchange regulations" will gain some support in Congress. However, comprehensive DeFi legislation will be carried over to 2027 or later.

Investment/Action Implications: HYPE token has potential for 10-20% upside due to resolution of regulatory uncertainty. DeFi-related tokens (UNI, AAVE, DYDX) will also benefit in correlation.

Optimistic — DeFi's legal status comprehensively established (Probability: 15-25%)

The Trump administration's crypto-friendly stance and Chervinsky's congressional efforts succeed, leading to the inclusion of provisions recognizing the autonomy of DeFi protocols in the CLARITY Act. Other DeFi protocols (Uniswap, Aave) also follow suit by establishing lobbying organizations, reaching a critical mass for DeFi lobbying.

Investment/Action Implications: The entire DeFi sector rises 30-50%. HYPE has potential to reach new ATHs. CeFi tokens (COIN) also benefit, but with smaller gains than DeFi.

Pessimistic — Banking industry lobbying prevails, existing regulations applied (Probability: 20-30%)

Banking industry lobbyists (e.g., ABA) persuade Congress, and "intermediary liability" is imposed on DeFi protocols. Hyperliquid is forced to restrict its services in the U.S. or relocate offshore. The $29M lobbying investment fails, impacting the HYPE token price.

Investment/Action Implications: HYPE faces 30-50% downside risk. Selling pressure on the entire DeFi sector. Offshore DEXs (e.g., KuCoin) and privacy crypto assets (XMR) relatively benefit.

Key Triggers to Watch

• Timing of CLARITY Act's Senate passage: Will amendments to stablecoin provisions spill over to DeFi provisions? Q2-Q3 2026 is the critical period.
• Follow-up by other DeFi protocols: If Uniswap, Aave, and dYdX establish lobbying organizations, DeFi lobbying will reach critical mass.
• Chervinsky's congressional testimony: How effectively will his network as former head of the Blockchain Association function?
• Correlation between HYPE token price and lobbying budget: Currently down 49% from ATH. Risk of lobbying budget shrinking if it declines further.

Tracking Points

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Related patterns: The Structure Where AI Agents Started "Shopping" (日本語)

Sources:

• CoinTelegraph Japan: Hyperliquid DeFi Policy Advocacy Group Established
• CoinMarketCap: Hyperliquid (HYPE) Price
• CoinGecko: Hyperliquid Price