HPC, Phantom Urge CFTC to Distinguish Developers From Financial Service Providers in On-Chain Rules
Summary
- Hyperliquid Policy Center, or HPC, and Phantom told the CFTC that regulation of on-chain markets should distinguish between infrastructure developers and financial service providers.
- The two firms said US financial regulation has treated infrastructure provision and financial service provision as separate areas, and that rules should apply to businesses operating actual services rather than to developers.
- They also said the regulatory framework should be reviewed to reflect advances in financial technology and designed so developers can focus on technology development while registered businesses focus on service innovation.
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Hyperliquid Policy Center, or HPC, and Phantom submitted a joint comment letter to the US Commodity Futures Trading Commission, arguing that regulation of on-chain markets should clearly distinguish between infrastructure developers and financial service providers.
Crypto media outlet BeInCrypto reported on July 9 that the two firms said US financial regulation has long treated infrastructure provision and financial service provision as separate domains. Just as an internet service provider is not subject to financial regulation for carrying a financial firm's communications network, they wrote, regulation should apply to businesses that operate actual services rather than to developers.
The firms also called for the regulatory framework to be revisited in line with advances in financial technology. They said the system should let developers focus on building technology while allowing registered businesses to innovate in the services they offer.
They added that infrastructure development and the operation of financial services should be treated as distinct activities. The firms compared that separation to a software engineer who builds an order-matching engine for a futures exchange but has no role in operating the exchange itself.
JH Kim
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