Hyperliquid Policy Center and Phantom are asking the Commodity Futures Trading Commission to clarify how U.S. derivatives rules apply to on-chain market infrastructure.
The two groups submitted a joint comment letter on Thursday in response to the CFTC’s request for information on fintech rules. Their main request is simple: publishing on-chain protocol software alone should not force developers to register as exchanges, clearinghouses, brokers, or other regulated market firms.
The letter argues that current CFTC rules were written for traditional markets, where brokers, exchanges, and clearinghouses handle customer orders, funds, and settlement. HPC and Phantom say onchain markets work differently because users can keep control of their assets while using public blockchain infrastructure.
“Onchain markets work differently, and they need rules of their own.” according to the letter.
HPC and Phantom said the platform does not hold user funds, control private keys, execute trades between users, or intermediate transactions. They also said Hyperliquid is a general-purpose layer-1 blockchain that supports financial activity, including derivatives markets.
The groups told the CFTC that code running on a public blockchain should not be treated like a legal person or a financial company. They argued that registration rules should apply to people or firms that handle customer orders or funds, not to software itself.
Three requests to the CFTC
The letter recommends three steps. The first is for the CFTC to confirm that developing or contributing to onchain protocol software does not require registration when the developer does not control how the software is used.
The second request is guidance for CFTC-regulated exchanges, clearinghouses, and intermediaries that want to use onchain infrastructure. HPC and Phantom said a regulated exchange could use an onchain protocol as a matching and execution layer while still meeting market rules.
The third request is for the CFTC to turn its recent Phantom no-action letter into a formal rule. HPC and Phantom said this would give similar non-custodial wallet providers clear treatment instead of requiring each company to ask for relief one by one.
The CFTC issued that no-action position on March 17. It said staff would not recommend enforcement against Phantom for failing to register as an introducing broker, subject to conditions tied to its self-custodial wallet software and trading access through registered firms.
Phantom letter becomes part of the broader debate
The new comment letter builds on Phantom’s earlier relief. It argues that non-custodial front-end providers should not be treated as introducing brokers when they only provide technical access to a regulated market or intermediary.
HPC and Phantom also said regulated firms should be able to use public blockchain systems for execution, margining, settlement, clearing, default management, and recordkeeping.
They argued that public blockchains can help with transparency and verification, but regulated firms would still need controls for access, surveillance, disclosures, and risk management.
The CFTC request for information was issued on June 16 and published in the Federal Register on June 18. The agency said it wanted feedback on rules, guidance, orders, and no-action letters that may block fintech firms from working with federally regulated institutions. The comment period was set to close on July 9.
That timing puts the HPC-Phantom letter inside a larger review of how digital asset firms may connect with regulated markets. The CFTC said the feedback could help it identify rules that can be updated to support innovation and competition for fintech firms.
Crypto derivatives rules remain in focus
The request also lands as U.S. crypto derivatives rules face fresh debate. As previously reported by The Coin Headlines, the CFTC granted no-action relief for perpetual futures conversion on digital commodities, giving regulated exchanges a possible path to compete with offshore venues.
The Coin Headlines also reported that CFTC Chair Michael Selig has signaled a broader reset at the agency, including prediction market reforms and AI-driven oversight. That backdrop matters because onchain derivatives, perpetual futures, and non-custodial software are now part of the same policy discussion.
Hyperliquid has also become a larger topic in crypto markets. As previously reported, Multicoin Capital said Hyperliquid was evolving from a decentralized perpetuals venue into a wider exchange platform, while HYPE remained one of the few tokens holding up during a weak market cycle.
