Phantom & Hyperliquid tell CFTC: the code writes itself, please don't regulate the typist 📜

Crypto wallet provider Phantom and the Hyperliquid Policy Center have urged the US Commodity Futures Trading Commission (CFTC) to exempt blockchain protocol developers and non-custodial wallet providers from rules written for traditional financial intermediaries. The request was filed in response to a CFTC request for information on regulations affecting fintech firms.

In their letter, the companies asked the agency to confirm that blockchain protocol developers do not have to register solely for creating onchain software, to issue guidance allowing regulated derivatives firms to use blockchain infrastructure, and to codify exemptions preventing non-custodial wallet providers from being treated as introducing brokers. They argued that existing CFTC regulations were designed for custodial intermediaries that hold customer assets and process trades, whereas onchain protocols let users transact directly without intermediaries controlling funds or executing orders.

The groups said registration requirements should apply to entities that handle customer funds or execute trades, rather than to developers who create blockchain software or contribute to open-source protocols without controlling how the software is used. They also asked the CFTC to clarify that registered derivatives exchanges, clearinghouses and intermediaries can use onchain infrastructure for functions including trade execution, clearing, settlement, margining and recordkeeping, provided they comply with existing regulations. The groups warned that, without changes, "American users continue to be walled off from onchain derivatives markets," while innovation moves offshore.

The letter lands amid a broader regulatory debate over onchain derivatives. In May, Intercontinental Exchange and CME Group reportedly urged regulators to scrutinize Hyperliquid's expansion into commodity-linked perpetual futures, citing market integrity and manipulation risks. Two weeks later, ICE CEO Jeffrey Sprecher called for a "level playing field" that would let regulated exchanges offer 24/7 onchain perpetual futures, saying existing rules kept traditional venues from competing with platforms such as Hyperliquid. Sprecher also confirmed ICE held exploratory discussions with Hyperliquid to better understand onchain derivatives markets.

CME has continued building out its regulated crypto derivatives franchise this year, announcing futures tied to Avalanche and Sui, launching CFTC-regulated Bitcoin volatility futures and introducing the Nasdaq across additional digital-asset products.