Phantom and the Hyperliquid Policy Center asked the U.S. Commodity Futures Trading Commission (CFTC) to exclude blockchain protocol developers and non-custodial wallet providers from existing rules for financial intermediaries.

Cointelegraph reported on July 9 that the two organisations said onchain derivatives rules were designed around traditional financial intermediaries and need to be updated to reflect reality.

In a letter submitted as part of the CFTC’s fintech regulation feedback process, Phantom and the Hyperliquid Policy Center made three requests. They asked that developers not be required to register simply for creating onchain software. They also called for guidance so regulated derivatives firms can use blockchain infrastructure. They urged the CFTC to codify an exception so non-custodial wallet providers are not classified as introducing brokers.

Phantom and the Hyperliquid Policy Center said current CFTC rules assume custodial financial intermediaries that hold customer assets and process transactions. They said onchain protocols allow users to trade directly without intermediaries controlling funds or executing orders. Registration obligations should apply to entities that handle customer funds or execute trades, they said, and should not be applied across the board to developers who create blockchain software or contribute to open-source protocols.

The two groups also asked the CFTC to make clear that registered derivatives exchanges, clearinghouses and intermediaries can use onchain infrastructure for trade execution, clearing, settlement, margin management and record-keeping, provided they comply with existing rules. If such recommendations are not adopted, U.S. users will continue to be unable to access the onchain derivatives market and innovation will continue overseas, they said.