‘Every single exchange’ will have to adopt public blockchain infrastructure to compete, Hyperliquid Policy Center CEO says

The Imperative of Public Blockchain Adoption for Exchanges

In a recent interview with The Block, Jake Chervinsky, CEO of Hyperliquid Policy Center, made a bold claim: every single exchange will need to adopt public blockchain infrastructure to stay competitive. This assertion reflects a growing consensus that the regulatory and technological landscapes are converging in ways that favor on‑chain solutions.

Why Public Chains Matter for Regulation

Chervinsky argues that regulated perpetual contracts are only the tip of the iceberg. To truly satisfy U.S. regulators, exchanges must bring their markets onchain—that is, onto a transparent, immutable ledger that can be audited in real time. Public blockchains provide:

• Auditability – Every trade and settlement is recorded in a tamper‑proof ledger, simplifying compliance reporting.
• Interoperability – Cross‑chain bridges and layer‑2 solutions enable seamless asset transfers, reducing friction for users.
• Transparency – Regulators can monitor activity without intrusive data requests, potentially easing the burden of Know‑Your‑Customer (KYC) and Anti‑Money Laundering (AML) checks.

The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have both signaled a willingness to engage with on‑chain derivatives. Chervinsky expects this regulatory perimeter to expand soon, making public‑chain adoption not just advantageous but necessary.

Competitive Edge Through On‑Chain Innovation

Beyond compliance, on‑chain infrastructure offers tangible competitive benefits:

• Speed and Cost – Layer‑2 rollups and sidechains can process thousands of transactions per second at a fraction of the gas cost, improving user experience.
• Programmability – Smart contracts automate risk management, margin calls, and settlement, reducing operational overhead.
• Decentralized Governance – Token‑based voting mechanisms can align the interests of traders and platform operators, fostering trust.

Chervinsky notes that exchanges that fail to migrate risk losing market share to platforms that can offer faster, cheaper, and more transparent trading. The shift is already underway, with several legacy exchanges piloting hybrid models that combine off‑chain order books with on‑chain settlement.

Challenges and the Path Forward

Transitioning to a public blockchain is not without hurdles. Scalability, interoperability, and the need for robust oracle solutions remain critical technical challenges. Moreover, exchanges must navigate the evolving regulatory framework, ensuring that on‑chain activities meet the same standards as traditional derivatives.

Hyperliquid Policy Center is actively working with regulators to shape policies that recognize the unique attributes of on‑chain markets. By providing a clear roadmap for compliance, the organization hopes to accelerate the industry’s adoption of public blockchains.

Conclusion

Jake Chervinsky’s call to action signals a turning point: exchanges that embrace public blockchain infrastructure will not only meet regulatory expectations but also unlock new efficiencies and competitive advantages. The industry’s future hinges on how quickly and effectively these platforms can integrate on‑chain solutions into their core operations.

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TL;DR: Chervinsky says exchanges must adopt public blockchain infrastructure to compete, as regulators push on‑chain markets into the U.S. regulatory perimeter, offering auditability, speed, and transparency.