Hyperliquid and Phantom Jointly Submit Regulatory Comments to CFTC
Hyperliquid Policy Center (HPC) and Phantom jointly submitted comments to the U.S. Commodity Futures Trading Commission (CFTC), recommending a clear distinction between "building on-chain tools" and "operating regulated businesses."
The comments pointed out that software engineers writing matching engines for traditional futures platforms have not been viewed as operators for decades, while digital asset developers have faced regulatory uncertainty, forcing them offshore. The two companies proposed three specific recommendations, including confirming that publishing protocol software does not require registration, providing a pathway for registered institutions to operate on-chain infrastructure, and converting Phantom's no-action letter into formal rules.
This move benefits from the reform direction of current CFTC Chairman Selig, promoting self-custody wallets and transparent on-chain systems that embed investor protection into the technology itself, while leaving room for innovation in digital asset derivatives for fintech companies within the U.S.
Source: Public Information
ABAB AI Insight
Hyperliquid and Phantom's previous regulatory interactions have shown their active participation in U.S. policy-making. Phantom previously received a CFTC no-action letter, and this joint submission of formal comments continues the path of pushing for clearer rules through industry voices. The Hyperliquid Policy Center focuses on bridging on-chain markets with regulatory frameworks, and the team's strategy aligns with past lobbying models of crypto firms.
On the capital front, the two companies are mobilizing resources through policy initiatives aimed at creating a certain environment for on-chain developers and regulatory agencies, motivated by attracting more institutional funds back to the U.S. rather than offshore. Specific actions include clearly separating technical development from business operations, reducing compliance costs for developers, and encouraging on-chain infrastructure to replace outdated traditional systems.
Similar to early crypto companies like Coinbase pushing for regulatory dialogue, Hyperliquid and Phantom are currently in a transformative phase to help the CFTC incorporate digital asset derivatives into the existing framework, aiming to make self-custody and transparent on-chain systems mainstream.
Essentially, this represents a regulatory change: the CFTC is reshaping the entry barriers of the digital asset market by clearly distinguishing between tool development and business operations, with the mechanism of regulatory certainty reducing offshore incentives and attracting capital and talent back to the U.S., thereby promoting the next generation of financial market infrastructure to take root domestically rather than flowing abroad.
ABAB News · Cognitive Law
- Regulatory clarity itself is the strongest capital gravitational field.
- Clearly separating "developing tools" from "operating businesses" allows innovation to return from offshore to domestic.
- Problems that technology can solve should be embedded in code, while unresolved responsibilities should remain with intermediaries, which is the sustainable structure for investor protection.