Hyperliquid and Solana-based wallet Phantom have called on US derivatives market regulator the Commodity Futures Trading Commission (CFTC) to modernize its regulations.
In a letter sent to the CFTC, DeFi players demanded three things. First, the institution should not treat an unregulated software developer (users control the funds, not the platform) as a broker.
In other words, building on-chain protocols should not automatically trigger CFTC registration as an exchange or clearinghouse. To put it bluntly, they want developer protection.
Secondly, the no-transaction discount granted to personal storage wallets, which was granted to Phantom in March 2026, needs to be made an official guideline.
Industry coalition was established similar argument and was pushed in April. If adopted, non-custodial DeFi frontends like Phantom would not need a broker-dealer or exchange registration to process even US tokenized stocks.
Finally, they want the CFTC to create a framework that allows regulated entities to use blockchain for commerce and payment.
Why do DeFi companies seek exemptions?
letter It was a response to the CFTC’s request for information on issues that prevent fintechs from partnering with regulated entities.
Some of the issues raised by Hyperliquid and Phantom are DeFi exemptions, some of which are discussed in the CLARITY Act. In fact, even the SEC is exploring a similar “innovation exemption” for tokenized asset trading.
DeFi players warned that ignoring these recommendations would reinforce the status quo with serious consequences.
The alternative is the status quo: American users continue to be walled off from on-chain derivatives markets, innovation continues to be offshored, and US registrants continue to be denied the ability to modernize their infrastructure.
Why might a DeFi exemption request be delayed?
However, these demands, even if accepted, could cause legal difficulties for traditional market participants. Chicago Mercantile Exchange (CME) currently lawsuit filed CFTC on Kalshi approving permanent crypto holdings (perpetrator).
CME argued that swaps rather than futures were the culprits, meaning the contracts should fall within its regulatory framework. This stance prompted the CFTC to rethink how it defines swaps.
Hyperliquid Policy Center founder Jake Chervinsky said the CME lawsuit was anticompetitive and a “shocking misjudgment.”
Citadel Securities and the umbrella organization representing traditional stock exchanges are also Opposed to DeFi exemptionsespecially for trading tokenized assets. They argue that regulators should treat each platform like a broker based on its function, not its underlying technology.
In short, DeFi platforms that manage US tokenized stocks must meet the same disclosure requirements and legal obligations as traditional exchanges.
Other traditional market participants, such as CME, could also sue the agency if it grants the requested DeFi exemptions, especially since lawmakers have failed to legislate them and the future of the CLARITY Act remains uncertain.
Final Summary
- Hyperliquid and Phantom request CFTC for official exemptions for DeFi frontends
- But since the CLARITY Act is still unclear, CME and other traditional players will continue to legally challenge the regulator over such demands.
