Hyperliquid Policy Center (HPC) and Phantom have jointly urged the U.S. Commodity Futures Trading Commission to create regulations specifically designed for onchain trading, arguing that existing rules built for traditional financial markets do not fit decentralized infrastructure. In a comment letter submitted Thursday, the groups said developers of decentralized trading software and non-custodial wallet providers should not face the same registration requirements as traditional intermediaries.
Call for DeFi-specific rules
The submission responds to a joint Request for Information issued last month by the CFTC and the Securities and Exchange Commission, which sought public feedback on regulations that may be slowing financial innovation. HPC and Phantom argued that onchain markets operate differently because users retain control of their own assets, unlike traditional markets where brokers, exchanges and clearinghouses hold customer funds throughout the trading process.
The organizations said developers of onchain trading software should not automatically be required to register as exchanges or clearinghouses simply because they build decentralized infrastructure. They also argued that non-custodial wallet interfaces such as Phantom should not be treated as introducing brokers. According to the filing, blockchain-based software cannot be regulated in the same way as centralized intermediaries because code cannot enter contracts, respond to regulators or exercise legal responsibilities.
Broader regulatory context
The proposal arrives as U.S. regulators continue reviewing how decentralized finance fits within existing derivatives rules. CFTC Chair Michael Selig previously said the 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.
CME legal challenge
The filing also comes while the CFTC faces legal action from CME Group over its approval of regulated crypto perpetual futures. 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 Dodd-Frank and claims the regulator bypassed the legal process required for swap products. The dispute gained 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.