Phantom, Hyperliquid urge CFTC to exempt blockchain developers from derivatives rules
In brief
- Phantom and Hyperliquid Policy Center urged CFTC to exempt blockchain developers from registration requirements
- Existing rules target custodial intermediaries, not developers building onchain software, companies argued
- CFTC asked to allow regulated exchanges to use blockchain infrastructure for trade execution
The exemption request
Existing CFTC regulations were designed for custodial financial intermediaries that hold customer assets and process trades. The companies argued this framework doesn't fit blockchain infrastructure, where users can 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. They also asked the CFTC to codify exemptions preventing non-custodial wallet providers from being treated as introducing brokers.
Guidance for regulated firms
The companies requested guidance allowing regulated derivatives firms to use blockchain infrastructure. More specifically, they asked the CFTC to clarify that registered derivatives exchanges, clearinghouses and intermediaries can use onchain infrastructure for trade execution, clearing, settlement, margining and recordkeeping.
The groups stated that without adopting their recommendations, American users continue to be walled off from onchain derivatives markets while innovation continues offshore. The alternative is a status quo where regulatory ambiguity pushes development and trading activity outside U.S. jurisdiction.
Competing pressures
The request comes after Intercontinental Exchange and CME Group urged regulators to scrutinize Hyperliquid's expansion into commodity-linked perpetual futures. ICE CEO Jeffrey Sprecher called for a level playing field that would allow regulated exchanges to offer 24/7 onchain perpetual futures, and said ICE had held exploratory discussions with Hyperliquid to better understand onchain derivatives markets.
CME has been active in the space, announcing futures tied to Avalanche and Sui, launching CFTC-regulated Bitcoin volatility futures and introducing the Nasdaq CME Crypto Index futures. In June, CME sued the CFTC over the agency's approval of crypto perpetual futures, arguing the regulator exceeded its authority under the Commodity Exchange Act.
