Phantom and Hyperliquid Policy Center ask CFTC to clarify 3 onchain rules

Phantom Technologies and the Hyperliquid Policy Center filed a joint comment with the Commodity Futures Trading Commission on July 9, asking the agency to clarify that publishing onchain protocol software does not, by itself, trigger registration requirements.

"Current rules generally assume a custodial market structure where intermediaries handle customer orders and funds, while onchain markets can allow users to trade directly and retain control of their assets," the groups said in their filing.

The comment makes three requests. First, the CFTC should confirm that developing or contributing to onchain protocol software does not alone require registration as an exchange or clearinghouse. Second, registered designated contract markets and derivatives clearing organizations should be allowed to use onchain protocols for matching, execution, margining, settlement and default management. Third, the agency should turn its March no-action letter for Phantom into a formal rule, extending the same certainty to other non-custodial wallet providers.

The filing responds to a CFTC request for information issued June 18, which asked the industry to flag rules that may limit fintech firms from partnering with financial infrastructure and intermediaries regulated by the commission. Phantom said it does not hold user funds, control private keys, execute trades between users or intermediate transactions. The Hyperliquid Policy Center described itself as an advocacy group focused on creating a regulated path for Americans to access onchain markets, including those available on Hyperliquid.

The groups argued that non-custodial wallets should not carry intermediary obligations because they never hold customer funds or execute trades. They said rules built for onchain markets would keep developers in the United States rather than offshore, and that transparent DeFi markets can settle faster and cut counterparty risk.

The filing lands under a friendlier CFTC. Chairman Michael Selig took office in December and has since pushed US crypto regulation toward clearer rules, including approving onshore perpetual futures. The groups framed the request as within the CFTC's current authority. "This is our answer, and it is within the Commission's own authority to act on," HPC and Phantom said in a joint statement.

The CFTC will weigh industry responses before deciding whether to issue guidance or begin rulemaking. Its answer could determine how much onchain activity moves onshore and whether US-based developers can build DeFi infrastructure without facing registration obligations designed for custodial intermediaries.

This article is for informational purposes only and does not constitute investment advice.