Hyperliquid Policy Center, Phantom urge CFTC to stop treating onchain protocols like traditional brokers and exchanges

Hyperliquid and Phantom have submitted formal responses to a CFTC Request for Information regarding the classification of on-chain protocols. These entities argue that decentralized platforms should not be regulated under the same frameworks as traditional centralized brokers and exchanges. The core of their argument centers on the technical reality that on-chain protocols operate via autonomous smart contracts rather than human intermediaries. By urging regulators to distinguish between decentralized infrastructure and legacy financial institutions, these firms aim to prevent stifling innovation within the digital asset ecosystem. This regulatory dialogue is critical for the RWA market, as the legal status of on-chain trading venues directly impacts the feasibility of tokenized asset distribution. If regulators adopt a rigid approach, it could force RWA protocols to adopt burdensome compliance structures that negate the efficiency benefits of blockchain technology. Conversely, a nuanced regulatory stance could provide the legal clarity necessary for institutional adoption of decentralized finance platforms. Ultimately, the outcome of this consultation will shape the operational landscape for any RWA project seeking to leverage decentralized liquidity pools.