French authorities propose classifying on-chain perpetual contracts as financial instruments subject to MiFID, even when they are issued or traded through smart contracts. This position, submitted during the review of MiCA, would place Hyperliquid, dYdX and other decentralized finance protocols under a more demanding regime than that applicable to crypto-asset service providers. Hyperliquid accounts for roughly one third of decentralized perpetual contract volume over 30 days, with $212 billion out of $643 billion, and more than half of open positions. Affected platforms would either need an investment firm license and comply with requirements covering suitability, best execution and transparency, or block European Union residents. The European Commission must arbitrate the proposal, while the MiCA review is not expected before 2027 or 2028.
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