Crypto09 July, 20263 min read
Phantom And Hyperliquid Policy Center Urge CFTC To Exempt Onchain Derivatives From Legacy Rules
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Joint comment seeks exemption from exchange and clearinghouse registration for onchain protocol software. Registration should target entities handling customer funds or executing trades, not developers.
CFTC urged to modernize
Phantom and the Hyperliquid Policy Center urged the US Commodity Futures Trading Commission (CFTC) to modernize rules for onchain derivatives by exempting blockchain protocol developers and non-custodial wallet providers from regulations designed for traditional financial intermediaries. In a letter tied to a CFTC request for information, the groups asked the agency to confirm that publishing onchain protocol software does not alone require registration as an exchange or clearinghouse and to codify exemptions preventing non-custodial wallet providers from being treated as introducing brokers. They also sought guidance allowing regulated derivatives firms to use blockchain infrastructure for functions including trade execution, clearing, settlement, margining and recordkeeping while continuing to comply with existing regulations.
The companies argued that existing CFTC regulations were designed for custodial financial intermediaries that hold customer assets and process trades, while onchain protocols allow users to transact directly without intermediaries controlling funds or executing orders. The Block framed the same push as a call to stop treating onchain protocols like traditional brokers and exchanges, quoting the groups’ argument that “The Commission's preexisting rules were built for legacy markets.”
DeFi vs legacy rules
Hyperliquid Policy Center and Phantom filed a joint comment ahead of the CFTC’s July 9, 2026 comment deadline responding to a June 18 RFI, asking that onchain protocol software and non-custodial wallets be exempt from exchange and clearinghouse registration. The Block reported the groups’ position that simply building onchain trading software should not trigger registration requirements as an exchange or clearinghouse, and it said the groups argued that code itself “has no legal personality, no capacity to enter into contracts, and no ability to respond to regulatory inquiries.” Coin Academy added that the CFTC is also expanding its crypto-derivatives oversight through an Innovation Advisory Committee (IAC) that names 35 executives, including Brian Armstrong, Brad Garlinghouse, and Anatoly Yakovenko, to guide crypto-derivative regulation in the United States.
Coin Academy said the committee is under the leadership of Mike Selig and that it nearly triples the size of a prior CEOs’ council established in late 2025, before Selig took the CFTC chair. In their joint framing of the regulatory debate, the groups told the CFTC the alternative to adopting their recommendations is the status quo, in which “American users continue to be walled off from onchain derivatives markets,” while innovation continues to take place offshore.
Who sits at the table
Coin Academy said the CFTC’s Innovation Advisory Committee (IAC) brings together crypto, traditional finance, and online betting under a single advisory framework, naming Coinbase, Nasdaq, CME, DraftKings, and FanDuel among the organizations represented.
The committee list in Coin Academy includes Michael S. Selig as Chairman of the CFTC and names figures such as Adena Friedman of Nasdaq, Terry Duffy of CME Group, Craig Donohue of Cboe, Jeffrey Sprecher of Intercontinental Exchange, and Tom Farley of Bullish.
Coin Academy also said the CFTC is accelerating with the SEC via Project Crypto and that Selig recently unveiled a joint crypto agenda with the SEC as part of that coordination initiative.
In parallel to the CFTC rulemaking push, TradingView reported that Intercontinental Exchange and CME Group urged regulators to scrutinize Hyperliquid’s expansion into commodity-linked perpetual futures, arguing that the decentralized platform’s energy derivatives posed market integrity and manipulation risks.
TradingView further reported that CME sued the CFTC in June over the agency's approval of crypto perpetual futures, arguing the regulator exceeded its authority under the Commodity Exchange Act, while ICE CEO Jeffrey Sprecher called for a “level playing field” for regulated exchanges offering 24/7 onchain perpetual futures.