Summary of Regulatory Status and Objectives
Published 7/10/2026, 2:22:43 AM
As of July 10, 2026, Hyperliquid and Phantom are pursuing a coordinated regulatory strategy with the CFTC. While Phantom has already secured a significant temporary victory, Hyperliquid is leading a broader push to codify these wins into permanent federal exemptions for decentralized infrastructure.
Summary of Regulatory Status and Objectives
| Entity | Current Status | Primary Regulatory Goal |
|---|---|---|
| Phantom | Secured (March 17, 2026) | Permanent codification of No-Action Letter 26-09. |
| Hyperliquid | Pending (July 9, 2026) | "Software Publishing Exemption" for on-chain protocols. |
| Joint Effort | Active Appeal | Integration of regulated entities (CME/ICE) with on-chain systems. |
1. Phantom’s "No-Action" Precedent
Phantom secured a landmark win on March 17, 2026, when the CFTC’s Market Participants Division issued No-Action Letter 26-09. This letter provides a blueprint for how non-custodial wallets can operate without traditional brokerage licenses [Source: https://www.cftc.gov/PressRelease/9197-26].
- Technology Vendor Status: The CFTC accepted that Phantom acts as a Technology Service Vendor (TSV) rather than an Introducing Broker (IB). This is because the wallet does not hold user assets or exercise discretion over order routing [Source: https://www.jennerblock.com].
- Registration Relief: Phantom is currently exempt from registering as an IB or Associated Person (AP), provided it maintains strict non-custodial policies and accepts joint liability with its registered collaborators for any Commodity Exchange Act violations [Source: https://www.morrisonfoerster.com].
2. Hyperliquid’s "Software Publishing" Appeal
Hyperliquid is currently leading a proactive "appeal" through its Policy Center. On July 9, 2026, it filed a joint response to a CFTC Request for Information (RFI) seeking three specific regulatory wins [Source: https://www.thedefiant.io]:
- The Software Publishing Exemption: Hyperliquid seeks a formal ruling that merely publishing open-source, on-chain protocol software does not trigger requirements to register as a Designated Contract Market (DCM) or Derivatives Clearing Organization (DCO) [Source: https://www.beincrypto.com].
- On-Chain Infrastructure Pathway: The appeal requests a framework that allows traditional registered entities (like the CME) to utilize decentralized on-chain systems for regulated functions [Source: https://finance.yahoo.com].
- Permanent Rulemaking: Hyperliquid is pushing to turn Phantom’s temporary "no-action" relief into a permanent federal rule, which would provide long-term legal certainty for the entire DeFi sector [Source: https://www.cryptobriefing.com].
3. Potential Precedents and Risks
A favorable outcome for these appeals would establish the first federal "Safe Harbor" for decentralized finance (DeFi) developers in the U.S. However, the path remains contested:
- Institutional Opposition: On May 15, 2026, CME Group and ICE urged the CFTC to increase scrutiny on Hyperliquid’s 24/7 crude oil perpetuals, citing concerns over KYC/AML and market manipulation [Source: https://www.bloomberg.com].
- International Pressure: The UK’s Financial Conduct Authority (FCA) updated its warning against Hyperliquid in June 2026, maintaining that the platform remains an unauthorized financial service in that jurisdiction [Note: not independently confirmed].
Conclusion
The primary win Hyperliquid and Phantom seek is the legal decoupling of software development from financial intermediation. If successful, this would allow developers to build and deploy trading protocols without being classified as regulated brokers or exchanges, provided they do not maintain custody of user funds. While Phantom has secured temporary relief, Hyperliquid’s broader "Software Publishing Exemption" remains pending as of July 2026.