Crypto wallet provider Phantom and the Hyperliquid Policy Center have jointly urged the US Commodity Futures Trading Commission (CFTC) to overhaul how it treats blockchain protocol developers and non-custodial wallet providers, arguing that current rules designed for traditional financial intermediaries are fundamentally misapplied to onchain infrastructure.
What the Companies Are Asking For
Responding to a CFTC request for information on regulations affecting fintech firms, Phantom and the Hyperliquid Policy Center put forward three core requests:
- Confirmation that blockchain protocol developers do not need to register solely because they create onchain software
- Guidance permitting regulated derivatives firms to use blockchain infrastructure for trade execution, clearing, settlement, margining, and recordkeeping
- Codified exemptions preventing non-custodial wallet providers from being classified as introducing brokers
The companies argue that existing CFTC registration rules target custodial intermediaries that hold customer assets and execute trades on their behalf. Onchain protocols, by contrast, allow users to transact directly, with no intermediary controlling funds or processing orders.
In their letter, the groups said registration requirements should apply to entities that handle customer funds or execute trades, not to developers who create blockchain software or contribute to open-source protocols without controlling how it is used.
The Stakes: Offshore Drift
The companies warned that failing to adopt their recommendations means preserving the status quo, in which ‘American users continue to be walled off from onchain derivatives markets,’ while innovation migrates offshore. The joint filing frames regulatory inaction as a competitive disadvantage for the United States.
A Deepening Regulatory Battle
The letter arrives as both crypto-native firms and legacy exchanges intensify pressure on US regulators over onchain derivatives oversight.
In May, Intercontinental Exchange and CME Group reportedly urged regulators to scrutinize Hyperliquid’s expansion into commodity-linked perpetual futures, claiming the decentralized platform’s energy derivatives posed market integrity and manipulation risks.
Weeks later, ICE CEO Jeffrey Sprecher called for a ‘level playing field’ allowing regulated exchanges to offer 24/7 onchain perpetual futures, saying current rules blocked traditional venues from competing with platforms like Hyperliquid. Sprecher also disclosed that ICE had held exploratory discussions with Hyperliquid to better understand onchain derivatives markets.
CME, meanwhile, has pushed ahead with its own regulated crypto derivatives expansion. This year the exchange launched futures tied to Avalanche and Sui, introduced CFTC-regulated Bitcoin volatility futures, and unveiled the Nasdaq CME Crypto Index futures, a market-cap weighted contract tracking seven digital assets.
Despite that expansion, CME sued the CFTC in June over the agency’s approval of crypto perpetual futures, arguing the regulator exceeded its authority under the Commodity Exchange Act.
Why It Matters
The Phantom and Hyperliquid Policy Center filing adds a DeFi-native voice to a regulatory debate that until recently was dominated by traditional exchange operators. By asking the CFTC to explicitly exempt open-source developers and non-custodial wallets from broker registration, the two groups are attempting to draw a legal boundary between software creation and financial intermediation, a distinction the agency has yet to formally codify.
