Hyperliquid and Phantom Ask CFTC for Clarity on Onchain Software

The Hyperliquid Policy Center and Phantom have sent a joint letter to the CFTC with a clear message: publishing onchain protocol software should not in itself entail a registration obligation. The two parties are calling on the US regulator to modernise the regulatory framework so that it aligns with the reality of self-custody and transparent onchain markets.

The Hyperliquid price stands at $67 at the time of writing, a slight decline of 0.4% over the past 24 hours.

Hyperliquid is available at OKX and Bybit.

Three concrete recommendations to the CFTC

In the letter to the CFTC, the Hyperliquid Policy Center and Phantom make three specific recommendations. First, they want the regulator to confirm that merely publishing onchain protocol software does not require registration. According to the submitters, this is often the decisive factor for developers in choosing whether to build in the US or to do so outside its borders.

Second, they advocate for a clear path for existing, registered exchanges and clearinghouses to perform regulated functions via onchain infrastructure. This would enable those parties to replace outdated systems with transparent alternatives.

Third, they ask the CFTC to convert the so-called Phantom no-action letter into a formal rule. This would give all providers of non-custodial wallets the same certainty automatically, without each company having to request an exemption individually.

Current framework falls short for onchain markets

The core of the argument is that the existing regulatory framework of the CFTC is designed for traditional, custodial intermediaries. Non-custodial wallet providers do not fulfil that role and should therefore not be treated in the same way. The CFTC already acknowledged this when granting the no-action letter to Phantom, but the Hyperliquid Policy Center and Phantom want this insight to now be enshrined in an official rule that applies to the entire sector.

The call fits into a broader movement in which crypto companies are actively seeking dialogue with regulators to gain regulatory clarity. Earlier, we also saw how Kraken is claiming a prominent role under the MiCA framework in Europe. The coming period will reveal whether the CFTC is willing to adopt the recommendations and adapt the framework to the reality of modern blockchain networks.