The Hyperliquid Policy Center (HPC) and non-custodial wallet provider Phantom have recently submitted a joint comment letter to the U.S. Commodity Futures Trading Commission (CFTC), urging the regulator to establish a clear distinction between on-chain protocol developers and regulated financial service providers. This submission comes in response to the CFTC's Request for Information (RFI) on evolving financial technology, which was issued on June 18, 2026, with comments due by July 9, 2026.
The core of their argument centers on the idea that current regulatory frameworks, designed for traditional financial intermediaries, are ill-suited for the decentralized nature of on-chain protocols. HPC and Phantom contend that developers who create and publish on-chain protocol software should not automatically be classified as operators of exchanges or clearinghouses, which would subject them to burdensome registration requirements.
This initiative is significant for the broader crypto regulation landscape, particularly for decentralized finance (DeFi). The organizations emphasize that U.S. financial regulation has historically recognized a distinction between building infrastructure and providing regulated financial services. They draw an analogy to software engineers who develop trading systems for traditional exchanges but are not themselves regulated as financial intermediaries. HPC and Phantom argue that this same principle should apply to blockchain developers, allowing them to focus on technological innovation without the immediate burden of financial service provider compliance.
Beyond clarifying the role of developers, the joint letter also puts forward two other key recommendations. First, it calls for the formalization of no-action relief for non-custodial wallet providers like Phantom. Phantom previously received specific no-action relief from the CFTC in March 2026, allowing it to connect users to regulated derivatives markets without registering as an introducing broker, provided certain conditions are met. HPC and Phantom now advocate for this type of relief to be codified into a broader rule, providing greater certainty for the industry.
Second, the submission recommends creating a clear and viable pathway for existing CFTC-registered exchanges and clearinghouses to integrate on-chain infrastructure into their operations. This would enable traditional financial entities to leverage the benefits of blockchain technology while continuing to meet their regulatory obligations. The organizations believe that such a pathway is crucial for fostering innovation within the U.S. derivatives markets and preventing talent and development from moving offshore due to regulatory uncertainty.
The CFTC's RFI itself was part of a broader effort stemming from Executive Order 14405, "Integrating Financial Technology Innovation into Regulatory Frameworks," signed on May 19, 2026. This executive order directs federal financial regulators to review existing regulations and identify updates that would better facilitate innovation and competition for fintech firms. The feedback provided by HPC and Phantom, alongside other market participants, is expected to inform potential future CFTC actions, including new guidance, interpretations, policy statements, or amended regulations.
The push by Hyperliquid Policy Center and Phantom highlights a growing sentiment within the crypto industry that regulatory frameworks need to adapt to the unique characteristics of decentralized technologies. By advocating for a nuanced approach that differentiates between infrastructure development and financial service provision, they aim to foster a regulatory environment that supports innovation while maintaining market integrity and consumer protection. The outcome of the CFTC's review and its subsequent actions will be closely watched by the digital asset community as it could significantly shape the future of on-chain markets in the United States.
Original announcement: Hyperliquid Policy Center