Two of crypto’s more prominent names just told the CFTC, politely but firmly, that writing code shouldn’t require a federal license.

The Hyperliquid Policy Center and Phantom Technologies submitted a joint comment letter to the Commodity Futures Trading Commission on July 9, responding to the agency’s Request for Information on fintech regulations. The core argument: developers who publish onchain protocol software shouldn’t be forced to register as Designated Contract Markets, Futures Commission Merchants, or any other regulated entity simply because their code exists.

What they’re actually asking for

The letter lays out three specific requests, and each one targets a different friction point in how current rules collide with onchain infrastructure.

First, they want the CFTC to confirm that developing and publishing onchain protocol software, by itself, does not trigger registration requirements. In English: if you build a smart contract that enables derivatives trading, you shouldn’t be treated the same as JPMorgan’s futures desk.

Second, they’re asking for updated guidance that would let CFTC-registered exchanges and intermediaries actually use onchain technology for their regulated functions.

Third, the letter asks the CFTC to formalize no-action relief that Phantom already received back on March 17, under CFTC Letter No. 26-09. That relief established that Phantom’s non-custodial wallet could connect users to registered derivatives markets without needing to register as an Introducing Broker. They want that precedent codified into lasting guidance rather than sitting as a one-off letter that could theoretically be rescinded.

The CFTC’s RFI was originally issued on June 18, giving industry participants a window to weigh in. This letter landed ahead of the deadline.

Why Phantom and Hyperliquid are the ones making this argument

Hyperliquid operates a Layer-1 blockchain built specifically for derivatives and financial activities. Its native token, HYPE, has a total max supply of 1 billion. The Hyperliquid Policy Center was established in early 2026 with the explicit goal of advocating for regulatory clarity around onchain markets.

Phantom is a non-custodial wallet provider. It doesn’t hold user funds. It doesn’t execute trades. It’s essentially a window into blockchain activity, not a participant in it. That distinction matters enormously in regulatory terms, because the traditional framework assumes that anyone connecting users to financial markets is, in some capacity, a broker or intermediary.

Phantom’s earlier no-action relief from the CFTC signaled that at least some regulators understood the difference between a tool that facilitates access and an entity that handles money. The joint letter tries to build on that precedent before it fades into bureaucratic obscurity.

The bigger regulatory picture

The CFTC has historically not treated the creators of offchain trading software as regulated entities simply for writing code. What this letter argues is that the same logic should extend to onchain developers.

The letter makes the case that onchain systems actually offer advantages over traditional custodial infrastructure. Peer-to-peer trading reduces intermediary risk. Settlement transparency improves on the opaque back-office processes of traditional finance. Self-custody eliminates the counterparty risk that comes with handing assets to someone else.

What this means for investors

Institutional capital has consistently cited regulatory uncertainty as the primary barrier to deeper engagement with onchain derivatives. A CFTC framework that explicitly permits registered entities to operate on blockchain infrastructure would remove one of the largest obstacles. The difference between “technically not illegal” and “explicitly permitted” is enormous when you’re a compliance officer at a fund managing billions.

The fact that Phantom already secured no-action relief suggests some internal appetite for accommodation, but codifying that into formal guidance is a different, slower process entirely.