The Coinformer banner
the coinformer
Contact
Live 5m
T
The Coinformer Newsroom
News09 July, 20263 min read

Phantom, Hyperliquid policy group ask CFTC to stop treating code like a broker

Phantom and the Hyperliquid Policy Center asked the CFTC to make room for on-chain businesses, arguing that code shouldn't be regulated like a broker.

Hyperliquid/The Coinformer

Discuss this article:

PERPLEXITYCHATGPTCLAUDEGEMINI
Does this story need context? Notes are selected by independent community ratings, not editors.
How it works

Phantom, the crypto wallet company, and the Hyperliquid Policy Center, an advocacy group focused on bringing markets available on Hyperliquid into a regulated U.S. framework, asked the Commodity Futures Trading Commission to clarify when crypto software becomes a regulated financial business.

  • In a July 9 comment letter, the two groups said the CFTC's existing rules were written for traditional derivatives markets, where brokers and clearinghouses sit between customers and trades.
  • They argue that on-chain markets can work differently because users can keep control of their own funds while interacting with blockchain-based software.

Phantom and HPC said the CFTC should focus its rules on firms that actually handle customer funds or regulated transactions. They also asked the agency to confirm that publishing or contributing to on-chain software, by itself, doesn't require registration with a regulator.

The three requests

Phantom and HPC asked the CFTC for three changes.

  1. First, they want the agency to confirm that developers don't need CFTC registration only because they publish or contribute to on-chain protocol software.
  2. Second, they want guidance allowing CFTC-registered firms to use on-chain infrastructure for regulated functions such as matching and settlement.
  3. Third, they want the CFTC to turn its recent Phantom no-action letter into a formal rule. That letter gave relief to a non-custodial wallet provider when its role was limited to providing the "technical means of access" to regulated markets.

Why they are asking now

The groups said current rules leave U.S. users unable to access decentralized finance markets, prompting developers to build offshore alternatives, while regulated U.S. firms continue using older infrastructure.

"The alternative is the status quo: American users continue to be walled off from onchain derivatives markets, innovation continues to take place offshore, and U.S. registrants continue to be denied the ability to modernize their infrastructure."

Phantom, HPC

The filing doesn't ask the CFTC to exempt on-chain derivatives from oversight, but asks the agency to separate software access from regulated market activity.

  • The letter came in response to the CFTC's June 16 request for information, where the regulator asked fintech firms to identify rules that may be blocking partnerships with CFTC-regulated exchanges.
CftcHyperliquid