Hyperliquid and Phantom Press CFTC for DeFi Regulatory Shift

In a formal response to a joint request for information from the CFTC and the SEC, the organizations contend that developers of decentralized trading software should not be shoehorned into registration categories meant for traditional exchanges. The letter specifically highlights that non-custodial wallet interfaces, such as Phantom, lack the operational control over user funds that would traditionally qualify them as introducing brokers. Because blockchain code cannot enter into legal contracts or perform the compliance duties of a human-led entity, the groups argue that applying existing derivatives rules creates an impossible regulatory burden.

This push for tailored oversight coincides with a broader institutional power struggle. CME Group is currently suing the CFTC over its approval of crypto perpetual futures, asserting that the regulator bypassed necessary legal processes by failing to classify these products as swaps under the Dodd-Frank Act. While CME seeks to limit competitors like Kalshi and Coinbase, HPC founder Jake Chervinsky has dismissed the lawsuit as a defensive attempt to stifle innovation. As regulators weigh these competing interests, the outcome of this review will dictate whether onchain markets can integrate with regulated firms without being forced to replicate the centralized models of the past.