Hyperliquid Policy Center and Phantom have urged the Commodity Futures Trading Commission to clarify that publishing onchain protocol software should not, by itself, trigger registration as a derivatives exchange, clearinghouse, broker or swap dealer.
In a joint comment letter filed July 9, the two organizations said the CFTC should draw a clearer line between neutral software development and regulated financial activity. The filing responds to the agency’s request for information on financial technology and asks the regulator to adapt its rules for onchain markets rather than forcing decentralized software into frameworks designed for custodial intermediaries.
The letter argues that developers who publish onchain protocol software should not automatically be required to register as designated contract markets, swap execution facilities, derivatives clearing organizations, futures commission merchants, introducing brokers or swap dealers. It also asks the CFTC to formalize recent no-action relief granted to Phantom and create a clearer route for registered exchanges, clearing organizations and intermediaries to use onchain infrastructure.
The request comes as U.S. regulators, exchanges and DeFi developers debate how derivatives law should apply to self-custodial wallets, decentralized trading interfaces and onchain perpetual futures. Hyperliquid has become one of the most visible examples of a high-volume onchain derivatives venue, while Phantom has emerged as a major non-custodial wallet provider seeking regulatory clarity for users accessing financial applications through self-custody.
Software Publishing Versus Intermediation
The central argument in the filing is that writing or publishing code is not the same as operating a market. Hyperliquid Policy Center and Phantom said current CFTC rules were built for traditional financial markets where intermediaries custody customer assets, control order routing, operate clearing systems and stand between counterparties.
Onchain protocols work differently. In a non-custodial structure, users retain control of their assets, transactions are executed by smart contracts, and market rules can be embedded transparently in code. The filing argues that applying legacy registration categories to software developers could misidentify the responsible party and create legal obligations that developers cannot practically satisfy.
The groups also said the CFTC should give registered entities a path to use onchain infrastructure for regulated functions. The comment said designated contract markets should be able to use onchain protocols for matching and execution, while derivatives clearing organizations should be able to use them for margining, settlement, clearing and default management.
That request is strategically important. It would not merely exempt DeFi developers from legacy rules; it would allow traditional regulated entities to adopt blockchain infrastructure inside the CFTC framework. Such a path could create a bridge between permissionless technology and regulated derivatives markets, potentially reducing the current divide between offshore DeFi activity and U.S.-supervised market structure.
Phantom’s earlier regulatory relief is a key precedent. In March, the CFTC’s Market Participants Division issued a no-action position saying it would not recommend enforcement if Phantom did not register as an introducing broker, provided its role remained limited to offering self-custodial wallet software and a front-end interface connecting users to registered derivatives entities.
DeFi Seeks a U.S. Rulebook
The filing reflects a broader industry push for rules that distinguish between infrastructure, interfaces and intermediaries. DeFi advocates argue that unclear registration requirements can push developers offshore, restrict U.S. user access and discourage regulated firms from experimenting with onchain settlement. Regulators, however, remain concerned about leverage, customer protection, market manipulation, sanctions compliance and accountability when financial activity occurs through decentralized software.
The stakes are particularly high for onchain derivatives. Perpetual futures have become one of crypto’s largest trading categories, but much of that activity occurs outside the United States or in regulatory gray areas. If the CFTC clarifies how registered platforms can use onchain infrastructure, it could open the door to more transparent and compliant derivatives markets using public blockchain rails.
The request also comes amid pressure from incumbent exchanges. Earlier reporting said CME and ICE had pressed for Hyperliquid to register with the CFTC, citing concerns about market oversight and stability. That debate underscores the competitive implications of regulatory clarity. Traditional exchanges want comparable obligations for rivals, while DeFi builders argue that software-based markets require a different framework.
For market participants, the outcome could shape whether U.S. users gain access to more onchain derivatives through regulated channels or remain largely separated from the fastest-growing parts of DeFi trading. For developers, the question is existential: whether publishing open protocol software can be treated as protected infrastructure work or as operation of a regulated financial business.
The CFTC is unlikely to resolve the issue immediately, but the joint filing gives regulators a concrete framework to consider. Hyperliquid Policy Center and Phantom are asking for a rulebook that recognizes self-custody, code-based execution and transparent onchain settlement without abandoning market oversight. The decision will help determine whether DeFi can integrate with U.S. derivatives regulation or continue developing mostly outside it.
