A key US Senate bill on crypto market regulation, the CLARITY Act, has been postponed to September. However, even its adoption will not resolve the regulatory issues for several fast-growing segments of the crypto industry, primarily decentralized finance (DeFi) services, writes The Information. Therefore, popular projects like Hyperliquid or Morpho are already seeking individual concessions and clarifications from US regulators that would allow them to develop their business in the United States.
The CLARITY Act bill aims to address a number of key regulatory issues concerning the cryptocurrency market. Specifically, it should determine which segments of the spot cryptocurrency market fall under the jurisdiction of the US Securities and Exchange Commission (SEC) and which are overseen by the Commodity Futures Trading Commission (CFTC).
However, even if passed, the document will only indirectly affect products from the decentralized finance (DeFi) sphere. Therefore, their representatives are pursuing regulatory solutions, exceptions, as well as the issuance of new clarifications or rules that take into account the specifics of their operations.
Hyperliquid Lobbyists
Currently, Hyperliquid does not have a CFTC-registered platform for derivatives trading in the US, and American users cannot trade through the platform's interface. A solution could be regulators allowing licensed companies in the US to offer clients perpetual futures on markets where trading, clearing, and settlement occur on the public Hyperliquid blockchain.
Recently, Hyperliquid lobbyists have held a number of meetings with representatives of the CFTC and SEC. According to Jake Chervinsky, head of the Hyperliquid Policy Center, his organization's goal is to convince regulators either to adapt existing rules for blockchain services to operate in the US or to develop new ones for them.
In early July, the Hyperliquid Policy Center, together with the Phantom cryptocurrency wallet developer, sent a comment letter to the CFTC, urging it to allow regulated companies to use on-chain markets for order matching and trade settlement, and to exempt developers and applications that do not hold client funds from registration requirements.
According to Chervinsky, the optimal solution would be for the CFTC to allow registered companies to offer clients trading of perpetual futures on the blockchain. In May, the commission already approved the launch of such products in the US for Kalshi and Coinbase. A source from The Information familiar with the regulator's position said discussions are ongoing, and the CFTC is reviewing new proposals together with exchanges and market participants.
At the same time, as Chervinsky acknowledges, obtaining such permissions will be a "difficult task for regulators" because on-chain markets like Hyperliquid create a whole range of questions that existing laws and regulatory requirements are not designed to address.
For example, in Hyperliquid, users self-custody assets in their wallets, and transaction records are kept on the blockchain. But current regulation assumes that these functions of asset custody and record-keeping are performed by regulated organizations, such as brokers or exchanges.
An additional complication is that Hyperliquid users trade perpetual futures linked not only to the prices of cryptocurrencies and commodities, such as oil or silver, but also to the value of stocks, for example, SpaceX. In the second quarter, contracts linked to real-world assets accounted for over 30% of the platform's total trading volume.
If futures on commodities fall under the jurisdiction of the CFTC, then "perps" (perpetual futures) linked to stocks may be regulated by securities laws and, accordingly, fall under the purview of the SEC.
In mid-July, a delegation from Hyperliquid met with the SEC's crypto working group. The parties discussed the platform's technology, its protocol, and its user base.
The "Gray Zone" of Crypto Lending
Meanwhile, the Clarity Act hardly touches the sphere of decentralized lending, leaving its regulation within the framework of current legislation to the discretion of regulators. In recent years, the popularity of cryptocurrency vaults has grown noticeably. The volume of deposits in Morpho has nearly doubled over the past year and now exceeds $12 billion.
Morpho's chief legal counsel, Chris Robins, told The Information that in July, he and his team met with SEC representatives to discuss the regulator's approach to cryptocurrency vaults. In his opinion, if the CLARITY Act is not passed, regulatory bodies may begin developing new rules to address this "gray zone."
In July, the SEC warned that certain operations with cryptocurrency vaults could fall under securities laws and stated it was considering the need to amend existing rules. Vault curators, such as Gauntlet and Steakhouse Financial, allocate funds to generate yield and manage risks.
Coinbase and Robinhood have already integrated Morpho into their applications, allowing users to deposit tokens into the protocol and earn income.
At the same time, according to Robins, the adoption of the CLARITY Act would give traditional financial organizations more confidence to work with on-chain lending pools. Theoretically, vaults registered as investment funds could appear.
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