Hyperliquid Policy Center and tradeXYZ filed a comment letter with the SEC on August 18 urging the agency to establish rules for trading perpetual contracts on unlisted companies before their initial public offerings.
The proposal seeks to create a new product class: cash-settled derivatives that grant price exposure to pre-IPO firms without conferring share ownership, voting rights, or access to IPO allocations. Both organizations asked the SEC and CFTC to clarify the legal classification of such instruments and to set standards for margins, disclosures, position limits, and safeguards against market manipulation.
Hyperliquid operates a decentralized derivatives exchange where retail and institutional traders can access perpetual contracts on cryptocurrencies and other assets. The platform has grown to handle billions in daily trading volume. tradeXYZ is a trading platform focused on emerging asset classes.
Pre-IPO trading already exists in the private equity and secondary markets through platforms like Forge and Slack, where accredited investors can trade shares in unlisted companies at valuations set by negotiated transactions. Perpetuals would allow any retail investor to take positions on price movements without minimum wealth thresholds, though they would carry no claim on the underlying equity.
The regulatory gap is material. The SEC currently treats equity derivatives on listed companies as securities subject to stringent rules, while the CFTC oversees commodity futures under a separate regime. Pre-IPO perpetuals fit neither category cleanly, leaving their status ambiguous. Hyperliquid and tradeXYZ argued that clarity would enable legitimate market infrastructure while allowing regulators to prevent fraud and excessive margin requirements.
The letter comes as crypto derivatives platforms face heightened SEC scrutiny over margin offerings and unaccredited customer access. Hyperliquid has operated without direct SEC registration, relying on its decentralized structure to argue it does not qualify as a traditional exchange. A regulatory framework for pre-IPO perpetuals could either legitimize such products or restrict them to accredited investors.
Hyperliquid and tradeXYZ are asking the SEC to act, but the agency has not published the comment letter or indicated when it might respond. The number of firms backing a pre-IPO perpetuals framework remains unclear, and no timeline exists for any rule proposal. If the SEC does not issue guidance by mid-2027, crypto platforms may face continued uncertainty over whether offering such contracts violates existing securities or commodities law.
