Hyperliquid Policy Center and Phantom Urge CFTC to Update Onchain Rules

TLDR

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Hyperliquid Policy Center and Phantom filed a joint CFTC comment.
The groups said legacy CFTC rules do not fit onchain markets.
They said protocol software alone should not trigger registration.
Phantom wants its CFTC no-action relief turned into a broader rule.
The filing comes amid debate over perpetual futures and swaps.

Onchain trading firms are asking the CFTC to stop applying broker, exchange, and clearinghouse rules to software developers and non-custodial tools that do not control customer funds.

The Hyperliquid Policy Center and Phantom filed a joint comment letter in response to the Commodity Futures Trading Commission’s request for information on how its rules affect financial innovation. The groups said existing rules were built for legacy markets that rely on brokers, exchanges, and clearinghouses, while onchain markets work through self-custody and code-based settlement.

HPC and Phantom Seek Developer Clarity

The Hyperliquid Policy Center and Phantom said developers who publish onchain protocol software should not be required to register as exchanges or clearinghouses only because others use their code. They argued that infrastructure builders should be separated from firms that directly provide regulated financial services.

The groups wrote, “The Commission’s preexisting rules were built for legacy markets.” They said traditional derivatives markets involve customers handing orders and funds to intermediaries, while onchain markets allow users to hold their own assets and interact directly with protocols.

The comment letter said code has “no legal personality, no capacity to enter into contracts, and no ability to respond to regulatory inquiries.” That point was used to argue that software itself should not be treated like an operator of a trading platform.

The groups also asked the CFTC to confirm that non-custodial front-end providers such as Phantom should not be treated as introducing brokers. Phantom previously received a no-action letter, and the groups want that approach turned into a broader rule.

CFTC Asked to Make Room for Onchain Infrastructure

The CFTC and SEC issued a joint request for information in mid-June, asking how current rules may affect financial innovation and partnerships between new technology providers and regulated firms. The request also asked whether certain definitions, including those tied to swaps, need updates.

HPC and Phantom said registered exchanges and clearinghouses should be allowed to use blockchain infrastructure for trading and clearing. They argued that regulated firms could modernize old systems while keeping core compliance duties.

The groups, as a result, recommended three main steps: confirm that publishing protocol software does not require registration, give CFTC registrants a clear path to use onchain infrastructure, and make the Phantom no-action position available to similar non-custodial wallet providers.

They said this would help bring onchain markets into the United States under CFTC oversight. Their position is that regulation should apply to firms performing regulated activities, not neutral software builders.

Perpetual Futures Debate Adds Pressure

The filing comes as the CFTC takes a more open approach to crypto under Chairman Michael Selig. In May, the agency approved the first U.S.-regulated Bitcoin perpetual futures contract and opened the door to more onshore perpetual products.

CME Group, as a result, has pushed for more scrutiny of Hyperliquid and later sued the CFTC over recent perpetual futures approvals. CME argued that perpetual futures should be treated as swaps rather than futures.

Hyperliquid Policy Center founder Jake Chervinsky criticized CME’s lawsuit, calling it a “shocking misjudgment” and accusing the exchange of trying to block competition. The dispute has added attention to how the CFTC should classify new market structures.

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