Key Takeaways:
Phantom Technologies and the Hyperliquid Policy Center are asking the Commodity Futures Trading Commission to codify three exemptions that would let onchain derivatives markets operate under US oversight, warning that without formal rulemaking, traditional exchanges will legally challenge any informal relief.
The joint comment, filed in response to the CFTC's request for information on fintech partnerships, argues that current regulations assume a custodial market structure where intermediaries handle customer orders and funds — a framework that does not fit protocols where users trade directly and retain control of their assets.
"Registration should apply to entities that handle customer funds or execute trades, rather than to developers who create blockchain software or contribute to open-source protocols without controlling how the software is used," the groups wrote in the filing, according to a copy published on Hyperliquidpolicy.org.
The three demands are specific. First, the CFTC should confirm that developing or contributing to onchain protocol software does not, by itself, trigger registration with the commission. Second, registered derivatives exchanges, clearinghouses and intermediaries should be permitted to use onchain infrastructure for trade execution, clearing, settlement, margining and recordkeeping, provided they continue to comply with existing regulations. Third, the CFTC should turn its recent Phantom no-action letter — which granted relief to the wallet provider as a non-custodial technical intermediary — into a formal rule, giving similar wallet and front-end providers broader certainty.
The alternative, the groups said, is the status quo, in which "American users continue to be walled off from onchain derivatives markets," while innovation continues offshore.
The pushback from traditional finance
The filing arrives as traditional exchanges escalate their pressure on regulators over onchain derivatives. In May, Intercontinental Exchange and CME Group urged the CFTC to scrutinize Hyperliquid's expansion into commodity-linked perpetual futures, arguing that the decentralized platform's energy derivatives posed market integrity and manipulation risks. Two weeks later, ICE CEO Jeffrey Sprecher called for a "level playing field" that would allow regulated exchanges to offer 24/7 onchain perpetual futures, saying existing regulations prevented traditional venues from competing with platforms such as Hyperliquid.
CME has taken a dual approach. The exchange continued expanding its regulated crypto derivatives business this year, launching futures tied to Avalanche and Sui, CFTC-regulated Bitcoin volatility futures and the Nasdaq CME Crypto Index futures. At the same time, 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.
The legislative clock is ticking
The regulatory push comes as the Digital Asset Market Clarity Act — the Senate's flagship crypto market structure bill — faces a narrowing window for passage in 2026. A new unified draft combining efforts from the Senate Banking and Agriculture Committees may emerge as soon as next week, according to people familiar with the negotiations, though the bill still lacks Democratic buy-in needed to clear the 60-vote threshold.
One of the key provisions in the Clarity Act negotiations is the Blockchain Regulatory Certainty Act, which would ensure crypto developers are not treated as money transmitters under federal regulations if they do not handle customer assets — closely mirroring the first demand in the Hyperliquid-Phantom filing. Senator Ron Wyden of Oregon signaled support for that provision in a letter to Senate leadership this week.
For Hyperliquid, the regulatory stakes are existential. The platform has generated roughly $1.15 billion in cumulative revenue and $828.8 million in annualized revenue, according to DefiLlama, with weekly perpetual volumes remaining above $35 billion over the past two months. HYPE futures aggregate open interest reached $3 billion, up 32% in a week. A significant share of protocol fees goes to the Assistance Fund, which systematically purchases HYPE on the open market, creating a buyback yield of 5% to 6% on the circulating market cap.
Whether the CFTC acts on the three demands before the political calendar shifts remains uncertain. The comment period is open, but the agency faces competing pressures from incumbent exchanges seeking to protect their turf and crypto platforms arguing that the US risks falling further behind offshore markets.
This article is for informational purposes only and does not constitute investment advice.
