Hyperliquid Policy Center, Phantom urge CFTC to update rules for onchain trading

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Onchain trading policy update

Highlights

Hyperliquid Policy Center and Phantom urge the CFTC to revise onchain trading rules so non-custodial providers and software are not required to register as exchanges or brokers.
The CFTC and SEC issued a joint Request for Information in mid-June, seeking feedback on regulations potentially hindering financial innovation and adoption by technology providers.
CME Group intensifies scrutiny of Hyperliquid and sues the CFTC over recent perpetual futures approvals, arguing these should be classified as swaps rather than futures.

Comment letter targets registration framework

As reported by The Block, Hyperliquid Policy Center and Phantom on Thursday ask the Commodity Futures Trading Commission to revise rules they say were built for centralized financial intermediaries rather than decentralized finance.

In a joint comment letter, the groups argue that software supporting onchain trading, including systems like Hyperliquid, should not by itself trigger registration as an exchange or clearinghouse. They also say non-custodial front-end providers such as Phantom do not need to register as introducing brokers because code does not have legal personality, cannot enter contracts and cannot answer regulatory inquiries in the way traditional platform operators can.

The filing responds to a Request for Information issued by the CFTC and the Securities and Exchange Commission in mid-June. That request asks for feedback on regulations that may be hindering financial innovation and making it harder for new technology providers to work with CFTC-regulated firms.

Crypto policy debate widens in derivatives market

Hyperliquid Policy Center and Phantom also argue that firms already registered with the CFTC should be allowed to adopt blockchain technology for trading and clearing. Their position comes as the CFTC under chair Michael Selig takes a more accommodating approach to crypto regulation during the Trump administration.

In May, the agency approves the first U.S.-regulated bitcoin perpetual futures contract, a move that opens the door for more perpetual products to come onshore. The broader debate has intensified as CME Group previously lobbies the CFTC and members of Congress to increase scrutiny of Hyperliquid, which sees notable uptake in perpetual oil contracts during the breakout of the Iran-U.S. war.

Last month, CME sues the CFTC over recent perpetual futures approvals in the U.S., arguing that perpetual futures should be classified as swaps rather than futures. A day after that lawsuit, the CFTC and SEC publish their joint public comment request, which directly asks whether the definition of swaps needs to be updated.

Our earlier report on CME’s proposed 24/7 WTI oil futures contract covered the CFTC’s move to block the exchange’s self-certification bid for a smaller, round-the-clock product amid concerns about market readiness and precedent. We also noted how CME’s separate legal fight over the CFTC’s approval of U.S.-listed crypto perpetuals is feeding into a wider debate about extending always-on, never-expiring derivatives into energy markets as demand grows for trading access during geopolitical shocks.

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