Hyperliquid Policy Center and Phantom have urged the U.S. Commodity Futures Trading Commission to update its rulebook for onchain trading, arguing that existing regulations built for traditional financial markets do not fit decentralized infrastructure.
Summary
- Hyperliquid Policy Center and Phantom have asked the CFTC to create rules tailored for onchain trading instead of applying legacy market regulations.
- The groups said developers of decentralized trading software and non custodial wallet providers should not face the same registration requirements as traditional intermediaries.
- The proposal comes as U.S. regulators review derivatives rules and CME continues its legal challenge over the CFTC’s treatment of crypto perpetual futures.
According to a joint comment letter submitted on Thursday by the Hyperliquid Policy Center (HPC) and Phantom, the current regulatory framework assumes a market structure where brokers, exchanges and clearinghouses control customer funds throughout the trading process. The organizations said onchain markets operate differently because users retain control of their own assets.
The submission responds to a joint Request for Information (RFI) issued last month by the CFTC and the Securities and Exchange Commission, which invited public feedback on regulations that may be slowing financial innovation and making it harder for new technologies to work with CFTC-regulated firms. As previously reported by crypto.news, the agencies are also reviewing whether existing definitions for swaps and related derivatives remain suitable for newer financial products.
HPC and Phantom seek tailored rules for decentralized markets
In their filing, HPC and Phantom argued that developers of onchain trading software should not automatically be required to register as exchanges or clearinghouses simply because they build decentralized infrastructure. They also said non-custodial wallet interfaces such as Phantom should not be treated as introducing brokers.
The organizations argued that blockchain-based software cannot be regulated in the same way as centralized intermediaries because, unlike traditional market operators, code cannot enter contracts, respond to regulators or exercise legal responsibilities.
Alongside those proposals, the letter said companies already registered with the CFTC should be allowed to use blockchain technology for trading and clearing without facing unnecessary regulatory barriers.
The recommendations arrive as U.S. regulators continue examining how decentralized finance fits within existing derivatives rules. CFTC Chair Michael Selig previously said the agency’s joint review with the SEC could help resolve longstanding uncertainties under the Dodd-Frank Act, while SEC Chair Paul Atkins has called for clearer definitions covering newer financial products.
Filing comes as CME challenges crypto perpetual futures
The proposal also lands while the CFTC faces legal action from CME Group over its approval of regulated crypto perpetual futures.
As previously reported by crypto.news, CME sued the regulator in June after it approved perpetual futures products from platforms including Kalshi and opened a regulated path for similar offerings. The exchange argues that perpetual contracts should be classified as swaps rather than futures under the Dodd-Frank framework and claims the regulator bypassed the legal process required for swap products.
The dispute gained additional attention after Kalshi expanded beyond Bitcoin perpetuals to list contracts linked to Ethereum, XRP and Hyperliquid, while Coinbase also secured a regulated route to offer certain crypto perpetual futures through infrastructure connected to Deribit.
HPC founder Jake Chervinsky has publicly opposed CME’s lawsuit, describing it as a serious mistake and accusing the exchange of trying to block new competitors. One day after CME filed its case, the CFTC and SEC published their joint request for public comment, which specifically asked whether the legal definition of swaps should be updated to account for emerging products such as crypto perpetual contracts.
