Hyperliquid Policy Center (HPC) and non-custodial wallet provider Phantom have jointly urged the Commodity Futures Trading Commission (CFTC) to exempt decentralized finance (DeFi) from legacy regulatory frameworks. The call came in a response to the agency’s Request for Information on evolving financial technology, arguing that onchain software and self-custodial wallets are tools, not financial intermediaries.
The joint comment was filed ahead of the CFTC’s July 9 deadline for public input. The organizations contend that applying traditional financial rules to DeFi could stifle innovation, as onchain infrastructure operates without central counterparties or custodians. They urge the CFTC to distinguish between protocols and traditional market participants.
This push aligns with broader crypto industry efforts to shape US regulatory policy under the current administration. The CFTC has not yet signaled how it will respond to the comment, but the agency has previously shown interest in understanding DeFi’s unique operational model through its Tech Fins initiative.
DeFi's total value locked (TVL) currently stands at roughly $70 billion across all chains, according to DefiLlama, with Hyperliquid’s own ecosystem representing a fraction of that total. The sector remains highly correlated with Bitcoin and Ethereum price movements, and any regulatory clarity could significantly impact market sentiment and capital flows.
Critics argue that exempting DeFi from all legacy rules could create regulatory gaps, leaving retail investors exposed to risks from unregulated, often unaudited protocols. Some consumer advocacy groups have called for a balanced approach that protects users without crushing innovation.