Major players in the crypto industry — Hyperliquid Policy Center (HPC) and non-custodial wallet developer Phantom — have submitted a joint appeal to the U.S. Commodity Futures Trading Commission (CFTC). Their key demand: not to apply the same regulations to decentralized finance (DeFi) as to traditional financial institutions.
The appeal was filed as part of the CFTC's request for proposals, which closes on July 9. In their comment, HPC and Phantom insist on a fundamental reclassification: on-chain protocols and non-custodial wallets should be considered tools, not financial intermediaries. Current rules for handling derivatives, in their view, were originally designed for centralized structures and are unsuitable for the decentralized ecosystem.
Three key demands to the regulator
The response from HPC and Phantom addresses the CFTC's June 18 request, in which the regulator asked market participants to identify rules hindering fintech development. In their document, the companies put forward three specific proposals.
First: achieve official recognition that publishing software for on-chain protocols does not equate to operating an exchange or clearinghouse. Developers should not automatically fall under registration requirements.
Second: allow already registered exchanges and clearinghouses to perform regulated functions in on-chain systems. This would enable U.S. derivatives trading rules to adapt to the blockchain environment without losing control over compliance with standards.
Third: enshrine at the official regulatory level the exemption granted to Phantom in March of this year, so that other non-custodial wallet providers receive similar guarantees.
Self-custody at the center of the debate
The argumentation of HPC and Phantom revolves around the nature of non-custodial wallets. They do not store client funds or conduct transactions on their behalf. Therefore, applying requirements designed for intermediaries to them is legally and technologically incorrect.
The organizations emphasize: clear rules for on-chain markets will help retain developers in the U.S. rather than push them abroad. Moreover, transparent DeFi markets can provide faster settlement and reduce counterparty risks.
The initiative comes amid a shift in the CFTC's direction: Chairman Michael Selig, who took office in December, publicly supports more transparent regulation of the crypto industry in the U.S. and has approved the launch of perpetual futures within the country.
The applicants specifically noted that their requests fully fall within the regulator's current scope of authority. "This is our response, and the decision on this matter lies entirely within the commission's competence," the joint statement from HPC and Phantom reads.
The CFTC will review market participants' positions and then decide whether to prepare specific clarifications or launch a new rulemaking process. This decision will directly determine how much on-chain activity remains within U.S. jurisdiction.
Expert opinion: This move by Hyperliquid and Phantom is a timely and strategically sound signal to the regulator. If the CFTC truly intends to modernize the market, it will have to acknowledge that DeFi protocols are not "exchanges in disguise" but a fundamentally different architecture. Attempting to force them into the framework of 1930s laws will only accelerate the exodus of innovation from the U.S.