In a joint remark letter, the pockets maker Phantom and the Hyperliquid Coverage Heart argue that writing onchain protocol software program isn’t operating a brokerage, and press the CFTC to preserve builders and non-custodial wallets off its registration rolls.
Posted July 9, 2026 at 7:12 pm EST.
Two crypto corporations have collectively requested the US Commodity Futures Buying and selling Fee to declare that writing decentralized-finance software program just isn’t the identical as operating a brokerage, and to preserve onchain protocol builders and non-custodial wallets — apps that by no means maintain customers’ funds or management their keys — off the company’s registration rolls.
The pockets maker Phantom and the Hyperliquid Coverage Heart, an advocacy group tied to the Hyperliquid blockchain, set out the request in a joint remark letter dated July 9. It responds to a CFTC request for information on guidelines which will “unduly impede” fintech corporations, which the company issued beneath an government order on financial-technology innovation.
The core of the argument is that software program just isn’t a market participant. The CFTC’s registration classes — for exchanges, clearinghouses, brokers and sellers — activate capabilities carried out by an individual or entity, the letter notes, and “Software operating on a public blockchain—even when it facilitates derivatives buying and selling—is none of these issues.” Such code, the corporations wrote within the letter, has “no authorized character, no capability to enter into contracts, and no skill to reply to regulatory inquiries.” Accordingly, the 2 argued, “onchain protocol software program builders mustn’t want to register as DCMs, SEFs, DCOs, FCMs, IBs, or SDs” — the CFTC’s acronyms for designated contract markets, swap execution amenities, derivatives clearing organizations, futures fee retailers, introducing brokers and swap sellers.
As a substitute, “registration necessities ought to apply to individuals or entities really dealing with buyer orders or funds or coming into into transactions with prospects,” they wrote within the letter. The letter likens the purpose to conventional markets, the place builders construct matching engines and different buying and selling infrastructure that registered corporations deploy with out the builders themselves being regulated because the trade.
The corporations requested the CFTC to take three steps: affirm that creating onchain protocol software program alone triggers no registration; subject steerage letting the fee’s personal registered markets use onchain infrastructure to run execution, clearing and settlement; and flip a March 2026 no-action letter granted to Phantom — which spared the non-custodial pockets from registering as an introducing dealer — into a proper rule for equally located corporations. The letter was signed by Phantom basic counsel Kevin Jacobs and Hyperliquid Coverage Heart coverage counsel Brad Bourque.
The stakes attain past the 2 corporations. How the CFTC solutions would assist settle whether or not US-based DeFi protocols and wallets get handled as regulated intermediaries, and whether or not People can attain onchain derivatives markets onshore — Phantom notes its Hyperliquid integration just isn’t accessible to US customers at the moment. The submitting is a remark in a broader assessment, not a rule, and the company has not stated the way it will reply.
Associated Hear: DEX in the City: Why the Market Structure Bill May Not Be Good for DeFi
AI-assisted content material: This text was produced with the help of AI instruments and was reviewed, edited, and fact-checked by a member of the Unchained editorial crew earlier than publication.
