Hyperliquid founder Jeff Yan has proposed a new regulatory model designed to bring traditional Wall Street capital onchain, CCN reports. The proposal targets the compliance gap that has kept large financial institutions away from decentralized trading infrastructure.

Yan leads Hyperliquid, the decentralized exchange built on its own HyperEVM and HyperCore stack. The platform has become one of the most actively used onchain perpetuals venues, processing billions in daily volume.

What does the proposal address?

The plan targets a structural problem. Large institutions face unclear rules when trading on permissionless protocols, where no intermediary holds the compliance role regulators typically examine. A workable framework could change how banks, asset managers and market makers engage with onchain venues.

The proposal follows a broader pattern. Senior figures across crypto firms have pushed regulators for clearer frameworks, arguing that institutional adoption depends on legal certainty rather than technical capability. Whether Yan's model gains traction with US regulators will determine its practical effect.

No regulatory body has formally reviewed the framework, and CCN's report does not state a timeline for any filing or consultation. The proposal arrives as policymakers debate market-structure legislation that would define how decentralized venues are supervised.

Why it matters for institutional flows

Compliance frameworks have become the deciding factor for institutional participation in onchain markets. Venues that can satisfy know-your-customer and reporting expectations stand to capture flows that currently remain on centralized infrastructure.

A regulatory model tied to a major decentralized exchange signals that onchain venues now engage with policy directly rather than waiting for rules to be imposed. The next test comes when regulators respond to pending market-structure proposals now under discussion in Washington.