Phantom and Hyperliquid Push CFTC to Update Crypto Derivatives Rules
Two crypto firms are urging the CFTC to carve out exemptions for blockchain developers and non-custodial wallet providers from legacy financial rules.
Two prominent cryptocurrency companies — Phantom, a leading non-custodial wallet provider, and Hyperliquid, a decentralized derivatives platform — have formally called on the Commodity Futures Trading Commission to modernize its regulatory framework to better reflect how onchain financial products actually operate. Their central argument: rules built for traditional financial intermediaries are a poor fit for software-layer participants who never take custody of user assets.
The distinction matters enormously in practice. Traditional derivatives regulations were designed around brokers, clearinghouses, and custodians — entities that hold client funds and sit between counterparties in a transaction. Non-custodial wallets and open-source blockchain protocols occupy a fundamentally different position; they provide access to markets without ever controlling the underlying assets. Applying the same compliance obligations to both categories, the firms argue, conflates infrastructure with intermediation.
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The appeal arrives at a pivotal moment for U.S. crypto policy. The CFTC has signaled greater openness to engaging with the digital assets industry under the current administration, and the onchain derivatives market has grown large enough that regulatory clarity is no longer a theoretical concern — it has become a practical prerequisite for continued U.S.-based development. Without explicit exemptions, developers face legal ambiguity that could push innovation offshore.
From a policy standpoint, the firms' position aligns with a broader industry argument: that regulating code the same way regulators oversee financial institutions creates perverse incentives and chills domestic technical development without meaningfully reducing consumer risk. Whether the CFTC moves toward a formal rulemaking or issues guidance short of that remains to be seen, but industry advocacy of this kind has historically preceded regulatory action in the digital assets space.
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