Phantom, Hyperliquid Seek CFTC Overhaul of Onchain Derivatives Rules

Crypto wallet provider Phantom and the Hyperliquid Policy Center have asked the US Commodity Futures Trading Commission (CFTC) to update its rules for onchain derivatives. They argue that existing regulations were designed for traditional financial intermediaries, but blockchain protocols allow users to transact directly without intermediaries controlling funds or executing orders.

The companies submitted a letter to the CFTC in response to a request for information on regulations affecting fintech firms. They asked the agency to confirm that blockchain protocol developers do not have to register solely for creating onchain software, and to provide guidance allowing regulated derivatives firms to use blockchain infrastructure.

The groups also requested that the CFTC codify exemptions preventing non-custodial wallet providers from being treated as introducing brokers. They claimed that registration requirements 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.