Hyperliquid and Phantom Urge CFTC to Clarify DeFi Rules
Hyperliquid and Phantom File Joint Comment With CFTC – Seeking Clear Exemptions for DeFi Software and Wallets
Key Takeaways
- The Hyperliquid Policy Center and Phantom submitted a joint comment to the CFTC ahead of the July 9 deadline.
- They argue that publishing onchain software and providing non-custodial wallets should not require exchange or clearinghouse registration.
- The filing responds to a June 18 CFTC request for information on rules affecting financial technology.
- The groups ask the CFTC to formalize prior no-action relief granted to Phantom in March.
Joint Filing Challenges Application of Traditional Derivatives Rules to DeFi
The Hyperliquid Policy Center and non-custodial wallet provider Phantom have jointly called on the US Commodity Futures Trading Commission to reconsider how existing derivatives regulations apply to decentralized finance. Their submission was filed ahead of the agency’s July 9 comment deadline.
The filing responds to a request for information issued by the CFTC on June 18. In that request, the regulator asked market participants to identify rules that may hinder the development of financial technology. Hyperliquid and Phantom argue that current frameworks, designed for traditional financial intermediaries, do not reflect how onchain systems operate.
According to the joint comment, publishing onchain protocol software does not amount to operating an exchange or clearinghouse. The two groups state that software developers and wallet providers should not automatically face registration requirements solely because their tools can be used in derivatives markets.
Three Core Requests to the CFTC
In their submission, the Hyperliquid Policy Center and Phantom outline three specific requests.
First, they seek confirmation that publishing onchain protocol software alone does not trigger an obligation to register as an exchange or clearinghouse. They argue that writing and deploying code is distinct from running a regulated market infrastructure.
Second, they propose that registered exchanges and clearinghouses should be permitted to conduct regulated functions using onchain systems. Under this approach, compliance responsibilities would remain in place, but operational processes could move onto blockchain-based infrastructure. The groups describe this as a way to modernize US derivatives rules without removing existing safeguards.
Third, they ask the CFTC to codify no-action relief previously granted to Phantom in March. Formal rulemaking, they argue, would extend similar regulatory clarity to other wallet providers operating under comparable models.
The filing states that these steps fall within the CFTC’s existing authority. Hyperliquid and Phantom frame their requests as measures that the Commission can adopt without new legislation.
Self-Custodial Wallets and Intermediary Obligations
A central element of the argument concerns the role of non-custodial wallets. Hyperliquid and Phantom state that such wallets do not hold customer funds and do not execute trades on behalf of users. Instead, they function as interfaces that allow individuals to interact directly with onchain protocols.
On this basis, the groups contend that non-custodial wallet providers should not be subject to intermediary obligations designed for entities that take custody of assets or match transactions. They draw a distinction between tools that enable user access and entities that operate trading venues or clearing services.
The filing also emphasizes that regulatory clarity for onchain systems could influence where developers choose to build and maintain projects. According to the submission, rules specifically designed for onchain markets could help keep development activity within the United States rather than pushing it offshore.
In addition, the groups note that decentralized finance markets operate with transparent onchain records and can settle transactions more quickly. They argue that such characteristics can reduce counterparty risk compared to some traditional arrangements.
Regulatory Context Under Current CFTC Leadership
The submission comes under CFTC Chairman Michael Selig, who took office in December. Since then, the Commission has moved toward clearer crypto regulation and has approved onshore perpetual futures.
Hyperliquid and Phantom position their comment as aligned with this direction. In public statements linked to the filing, they state that writing software should not be equated with running a market. They also indicate that, in their view, the Commission has the authority to clarify how existing derivatives rules apply to decentralized systems.
The CFTC will review responses to its request for information before determining whether to issue guidance or initiate formal rulemaking. The outcome could influence how onchain activity is treated under US derivatives law.
For users of crypto trading platforms and wallet services, the distinction between software providers and regulated intermediaries is directly relevant. Registration requirements can affect which services operate domestically, how products are structured, and what compliance measures apply.
Our Assessment
The joint filing by the Hyperliquid Policy Center and Phantom formally asks the CFTC to clarify that publishing onchain software and offering non-custodial wallets do not, by themselves, require registration as exchanges or clearinghouses. It also seeks to formalize earlier no-action relief and to permit regulated entities to use onchain systems while maintaining compliance duties. The Commission’s response to the June 18 request for information will determine whether these proposals lead to guidance or rulemaking, shaping how decentralized finance tools are treated under US derivatives regulation.
