Phantom, Hyperliquid ask CFTC to exempt devs from rules

Phantom and the Hyperliquid Policy Center asked the U.S. Commodity Futures Trading Commission to exclude blockchain protocol developers and noncustodial wallet providers from rules written for traditional financial intermediaries. The request came in a letter submitted to the CFTC in response to the agency’s request for information on fintech and derivatives rules.

The firms asked the agency to clarify that creating open-source onchain code does not require registration as an intermediary. They argued that existing CFTC rules target custodial firms that hold customer assets or execute trades, while onchain protocols let users transact directly with each other without an intermediary controlling funds or orders.

The letter requested three specific confirmations: that protocol developers need not register solely for building onchain software; that registered derivatives exchanges, clearinghouses and intermediaries may use blockchain infrastructure for functions such as trade execution, clearing, settlement, margining and recordkeeping while remaining subject to existing rules; and that noncustodial wallet providers should not be treated as introducing brokers.

The filing warned that without clear exemptions U.S. users could face restricted access to onchain derivatives and that development could shift offshore. The letter reads, “American users continue to be walled off from onchain derivatives markets.”

The request arrives amid a wider regulatory debate over how onchain derivatives should be overseen. Traditional exchanges and crypto-native platforms have raised competing concerns. Intercontinental Exchange and CME Group pressed regulators to review Hyperliquid’s introduction of commodity-linked perpetual futures, citing market integrity and manipulation risks tied to a decentralized structure. ICE’s chief executive has called for rules that would allow regulated exchanges to offer 24/7 onchain perpetual futures, and ICE has held exploratory discussions with Hyperliquid.

CME has continued to expand its regulated crypto derivatives business, adding products tied to multiple digital assets and launching CFTC-regulated bitcoin volatility futures and market-cap-weighted index contracts. In June, CME sued the CFTC over the agency’s approval of crypto perpetual futures, arguing the regulator exceeded its authority under the Commodity Exchange Act.

Phantom and Hyperliquid told the CFTC they want regulated market participants to be able to use onchain systems for core functions while remaining under applicable oversight. The groups said registration and enforcement should focus on entities that handle customer funds or execute trades rather than on developers who write code or providers that do not custody assets.

The CFTC has not adopted the proposed exemptions. The agency continues to gather comments and information as it evaluates how existing statutes and rules apply to blockchain-based derivatives and trading infrastructure.