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- Hyperliquid and Phantom want clearer U.S. rules that protect non-custodial DeFi developers.
- XRP open interest, market capitalization, and network activity continue to weaken.
- Lower exchange reserves reduce selling pressure but do not yet signal a bullish reversal.
The cryptocurrency market is navigating two very different stories this week. While XRP continues to struggle with weakening trading activity and fading investor participation, decentralized finance (DeFi) firms Hyperliquid and Phantom are urging U.S. regulators to modernize rules that they believe are slowing blockchain innovation.
Together, these developments highlight the contrasting forces shaping the digital asset market: declining short-term momentum for some cryptocurrencies and a broader push to build a more accommodating regulatory framework for blockchain-based finance.
Hyperliquid and Phantom Call for Clearer DeFi Rules
Hyperliquid and Solana wallet Phantom have submitted recommendations to the U.S. Commodity Futures Trading Commission (CFTC), asking the agency to update regulations surrounding decentralized finance.
The firms argue that developers creating non-custodial software should not automatically be treated as brokers or exchange operators simply because users interact with decentralized protocols. Since users retain control of their own assets, the companies believe developers should receive greater legal protection.
They also asked the CFTC to formalize earlier regulatory relief granted to Phantom for self-custody wallets. According to the companies, clear guidance would give blockchain developers greater confidence to build products without facing uncertain compliance obligations.
A third recommendation calls for a regulatory framework that allows licensed financial firms to use blockchain technology for both trading and settlement, potentially opening the door for broader institutional adoption.
Legal Challenges Could Slow Progress
Although regulators have shown increasing interest in blockchain innovation, proposed DeFi exemptions may not arrive quickly.
Traditional financial institutions have already challenged similar regulatory decisions. The Chicago Mercantile Exchange (CME) recently disputed the CFTC’s approval of crypto perpetual products, arguing they should fall under existing swap regulations instead.
Other major market participants, including Citadel Securities and organizations representing traditional exchanges, have also argued that tokenized asset platforms should meet the same regulatory standards as conventional brokerages and exchanges.
With lawmakers still debating broader digital asset legislation, any regulatory changes could face additional legal scrutiny before becoming permanent.
XRP Open Interest Continues to Decline
At the same time, XRP’s market data points to weakening investor confidence.
Open interest across cryptocurrency exchanges has dropped significantly from May levels, suggesting leveraged traders are reducing exposure instead of opening new positions. Binance has also recorded a noticeable decline in XRP open interest, reinforcing signs of softer speculative demand.
The token’s market capitalization has also contracted, indicating fresh capital has yet to return to the asset.
On-chain metrics present a mixed picture for XRP.
Exchange reserves have declined, meaning fewer XRP tokens are immediately available for sale. Whale transfers to exchanges have also remained relatively low, reducing the immediate risk of large-scale selling.
However, those positive signals are being offset by weaker network activity. An elevated Network Value to Transactions (NVT) ratio suggests blockchain usage has not kept pace with valuation, limiting the likelihood of a sustained recovery.
Until trading participation, spot demand, and on-chain activity improve together, XRP may continue to lack the momentum needed for a meaningful rebound.
Also Read: Bitwise ETF Shakes Up Crypto Holdings: Hyperliquid Replaces Polkadot and Avalanche
The crypto market currently reflects two very different realities. DeFi companies are pushing aggressively for regulatory clarity that could shape the industry’s long-term future, while XRP continues to wait for renewed investor demand. Whether through improved regulation or stronger market participation, both stories underline the importance of confidence in driving the next phase of digital asset growth.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
