Hyperliquid Policy Center and Phantom filed a joint comment letter on July 9 urging the Commodity Futures Trading Commission to clarify that publishing onchain protocol software should not automatically trigger registration requirements as a derivatives exchange, clearinghouse, broker or swap dealer. The filing responds to the CFTC's request for information on financial technology and argues the agency should distinguish neutral software development from regulated financial activity. The request comes amid ongoing debate among U.S. regulators, exchanges and DeFi developers over how derivatives law should apply to self-custodial wallets, decentralized trading interfaces and onchain perpetual futures.
Hyperliquid and Phantom Distinguish Software Publishing From Financial Intermediation
The joint comment letter argues that developers who publish onchain protocol software should not automatically be required to register as designated contract markets, swap execution facilities, derivatives clearing organizations, futures commission merchants, introducing brokers or swap dealers. The filing states that current CFTC rules were built for traditional financial markets where intermediaries custody customer assets, control order routing, operate clearing systems and stand between counterparties.
Onchain protocols work differently, according to the letter. In a non-custodial structure, users retain control of their assets, transactions are executed by smart contracts, and market rules can be embedded transparently in code. The groups said applying legacy registration categories to software developers could misidentify the responsible party and create legal obligations that developers cannot practically satisfy.
The filing also asks the CFTC to formalize recent no-action relief granted to Phantom and create a clearer route for registered exchanges, clearing organizations and intermediaries to use onchain infrastructure. In March, the CFTC's Market Participants Division issued a no-action position saying it would not recommend enforcement if Phantom did not register as an introducing broker, provided its role remained limited to offering self-custodial wallet software and a front-end interface connecting users to registered derivatives entities.
The comment said designated contract markets should be able to use onchain protocols for matching and execution, while derivatives clearing organizations should be able to use them for margining, settlement, clearing and default management. This path would allow traditional regulated entities to adopt blockchain infrastructure inside the CFTC framework.
DeFi Developers Push for U.S. Regulatory Framework
The filing reflects a broader industry push for rules that distinguish between infrastructure, interfaces and intermediaries. DeFi advocates argue that unclear registration requirements can push developers offshore, restrict U.S. user access and discourage regulated firms from experimenting with onchain settlement.
The request comes amid pressure from incumbent exchanges. Earlier reporting said CME and ICE had pressed for Hyperliquid to register with the CFTC, citing concerns about market oversight and stability. That debate underscores the competitive implications of regulatory clarity, as traditional exchanges want comparable obligations for rivals while DeFi builders argue that software-based markets require a different framework.
Singapore added Hyperliquid to its investor alert list days after Bybit inclusion, according to related reporting. Perpetual futures have become one of crypto's largest trading categories, but much of that activity occurs outside the United States or in regulatory gray areas.
Hyperliquid has become one of the most visible examples of a high-volume onchain derivatives venue, while Phantom has emerged as a major non-custodial wallet provider seeking regulatory clarity for users accessing financial applications through self-custody.
FAQ
What did Hyperliquid Policy Center and Phantom request from the CFTC on July 9?
Hyperliquid Policy Center and Phantom filed a joint comment letter on July 9 urging the CFTC to clarify that publishing onchain protocol software should not automatically trigger registration requirements as a derivatives exchange, clearinghouse, broker or swap dealer. The filing responds to the CFTC's request for information on financial technology.
Why do Hyperliquid and Phantom argue that software developers should not face automatic registration?
The groups argue that current CFTC rules were built for traditional financial markets where intermediaries custody assets and control order routing, while onchain protocols allow users to retain control of assets through smart contracts. They state that applying legacy registration categories to software developers could create legal obligations developers cannot practically satisfy.
What regulatory relief did Phantom receive from the CFTC in March?
In March, the CFTC's Market Participants Division issued a no-action position saying it would not recommend enforcement if Phantom did not register as an introducing broker, provided its role remained limited to offering self-custodial wallet software and a front-end interface connecting users to registered derivatives entities.
