The Hyperliquid Policy Committee has submitted feedback to the European Commission on the future development of the Markets in Crypto-Assets Regulation, bringing the decentralized perpetual-futures ecosystem into Europe’s debate over how MiCA should evolve as onchain markets become more sophisticated. The submission addresses regulatory questions emerging as the European Union reviews its digital-finance framework and considers whether existing rules adequately cover decentralized finance, blockchain-based trading and crypto services that do not resemble conventional centralized intermediaries.
A central issue is how European rules should treat decentralized protocols whose underlying software can operate without a company directly controlling users’ funds or approving individual transactions. MiCA already contains an important distinction for services provided in a “fully decentralized manner without any intermediary,” but the regulation does not comprehensively define how that standard should apply across different DeFi architectures. The Hyperliquid Policy Committee’s intervention seeks to influence how European policymakers approach that boundary as they consider the next stage of crypto regulation.
DeFi Tests MiCA’s Intermediary-Based Framework
MiCA was primarily designed around identifiable issuers and crypto-asset service providers. Those entities can be required to obtain authorization and comply with rules covering governance, custody, conflicts of interest, consumer protection and market conduct. Decentralized protocols create a more difficult regulatory question because some functions traditionally performed by exchanges can instead be executed by smart contracts and distributed networks. Hyperliquid illustrates that challenge. Its ecosystem supports onchain spot and perpetual-futures trading, with orders, positions and settlement integrated into blockchain-based infrastructure rather than a conventional centralized exchange database.
The policy question is therefore not simply whether an application calls itself decentralized. Regulators need to determine whether an identifiable person or company actually exercises control over activities that would ordinarily require authorization. That can include control over customer assets, transaction execution, protocol upgrades, frontend access and other operational functions. European regulators have previously warned that decentralization claims should be evaluated according to the substance of an arrangement rather than its branding. At the same time, applying rules written for custodial intermediaries directly to autonomous software can create obligations that no single participant is technically capable of fulfilling.
Brussels Considers MiCA’s Next Phase
The submission comes as the EU moves beyond MiCA’s initial implementation and evaluates gaps exposed by the continued development of digital-asset markets. MiCA’s rules for stablecoins began applying in June 2024, followed by its broader crypto-asset service-provider regime in December 2024. The legislation deliberately left some areas — including significant portions of DeFi — outside its immediate comprehensive framework while requiring further assessment. That has made the definition of genuine decentralization increasingly important. A broad interpretation could pull protocol developers, interfaces or governance participants into licensing regimes originally designed for exchanges and custodians. A narrow interpretation could potentially allow businesses exercising substantial practical control to structure themselves around decentralized technology while avoiding equivalent requirements. The Hyperliquid Policy Committee’s feedback enters that debate rather than changing European law itself.
A consultation submission has no immediate regulatory effect, and the European Commission is not required to adopt its recommendations. Any substantial expansion or amendment of MiCA would need to proceed through the EU’s legislative and regulatory processes. The intervention nevertheless reflects how crypto policy discussions are changing. Europe’s first major regulatory challenge was establishing rules for centralized exchanges, token issuers and stablecoins. The next phase increasingly concerns infrastructure where trading and settlement occur directly onchain and where identifying the regulated intermediary can be considerably harder.
For Hyperliquid and other DeFi ecosystems, the outcome could determine whether European regulation focuses primarily on activities and points of control, or attempts to extend conventional financial-intermediary rules more directly to decentralized software. The Policy Committee’s submission is therefore not a MiCA exemption or regulatory approval for Hyperliquid. It is an attempt to shape the framework policymakers may use when deciding where decentralized infrastructure ends and a regulated financial intermediary begins.