HPC, Phantom Challenge CFTC's DeFi Rules

Gauntlet Raises $125M From SBI | Matt Huang of Paradigm

Marco Manoppo & Karon Pangestu
July 10, 2026

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Hyperliquid Policy Center and Phantom's joint filing turns the CME lawsuit into a two-front war, arguing to the CFTC that code itself can't be regulated like a broker while incumbents simultaneously push to reclassify perps as swaps and slow onshore growth altogether.

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In Today's Email:

What Matters: HPC, Phantom Challenge CFTC's DeFi Rules 👀
Founders Highlight: Matt Huang of Paradigm 👨
Deal Flows: Gauntlet Raises $125M From SBI 💰️

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Narratives: Perps Turf War

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WHAT MATTERS

HPC, Phantom Challenge CFTC's DeFi Rules

State of play: Hyperliquid Policy Center and Phantom told the CFTC that treating onchain protocols like brokers and exchanges misapplies rules built for an intermediary-based system that decentralized finance was designed to remove.

The letter responds to a joint CFTC-SEC request for information issued in mid-June on regulations hindering financial innovation.
HPC and Phantom argue building trading software like Hyperliquid should not trigger exchange or clearinghouse registration requirements.
Non-custodial front-end providers such as Phantom should not have to register as introducing brokers, the letter states.
The groups contend code has no legal personality or capacity to respond to regulatory inquiries, unlike traditional platform operators.
CME Group sued the CFTC last month over perpetual futures approvals, arguing the products should be classified as swaps.

Why it matters: The CFTC's response could determine whether protocol developers face broker-dealer style liability simply for writing code, a question with implications far beyond Hyperliquid.

Our take: Incumbents want swaps classification to slow onshore perps growth; DeFi-aligned groups want a registration exemption that conveniently insulates protocols they're financially tied to.

For builders and investors: Protocol teams should track whether the CFTC adopts a functional test based on custody and control rather than one based on who wrote the software, since that distinction will define compliance exposure going forward.

BUILDER-INVESTOR HIGHLIGHT

Matt Huang of Paradigm

Intro: Matt Huang is Co-Founder and Managing Partner at Paradigm, a prominent frontier technology investment firm that manages over $12B in assets and invests in early-stage startups to mature protocols across crypto, Web3, AI, and robotics.

He serves on the boards of Stripe and Kalshi, and is the founder and CEO of Tempo, a payments network co-founded by Paradigm and Stripe.

Previous background: Before founding Paradigm in 2018, Matt was a partner at Sequoia Capital, where he led investments across internet, mobile, frontier technologies, and the firm’s crypto efforts.

Earlier, Matt founded Hotspots, a Y Combinator company acquired by Twitter in 2012, and was an early investor in ByteDance, Instacart, and Benchling.

The big idea: Matt’s big idea is to back founders who are building the technological and financial infrastructure for the future, spanning crypto, artificial intelligence (AI), and robotics.

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INSIGHTS

Aave Labs Launches Stable Vaults Product

Aave Labs is packaging its DeFi yield infrastructure into a plug-and-play product for fintechs and exchanges, smoothing variable onchain returns into predictable stablecoin earnings without exposing end users to bridges or liquidity management.

Stable Vaults deploy deposits across Aave V3, V4, Savings GHO, and custom ERC-4626 vaults, then convert variable yield into smoothed returns.
Institutions can customize supported stablecoins, restrict access to approved users, and set custom rates for different customer segments.
Users can deposit one stablecoin and redeem another at par through a two-step withdrawal process.
Only governance-approved strategies and bridges are used, with fund movements protected by timelocks.
The launch follows a governance dispute that saw contributors Aave Chan Initiative, BGD Labs, and Chaos Labs leave the protocol.

DEAL FLOWS

Gauntlet Raises $125M From SBI

Deal flows soared this week - we saw $380M+ in deals 💼

Gauntlet raised $125M in a Series C led solely by SBI Holdings, the same investor that backed EDX Markets days earlier, as the Japanese financial giant doubles down on crypto market infrastructure plays.

SBI Holdings USA was the sole investor, marking its second solo Series C into crypto infrastructure this week after EDX Markets.
Gauntlet plans to expand stablecoin coverage beyond USD and EUR into MXN, JPY, and other fiat-backed currencies.
The curator manages more than $1.5B in assets across vaults and works with over 150 fintechs and institutions.
CEO Tarun Chitra compared vaults' potential impact on DeFi to how ETFs expanded U.S. equities participation.
Gauntlet was last valued at $1B in 2022 following a $23.8M Series B; this round's valuation wasn't disclosed.

Deal flows in the past week:

M1X Global, $5.5M Seed Round
QIZ Security, $17M Seed Round
KOR Protocol, $7.5M Series A Round
Prime Intellect, $130M Series A Round
EDX Markets, $76M Series C Round
Gauntlet, $125M Series C Round
Mercado Bitcoin, $20M Strategic Round
Elliptic, Undisclosed $ Strategic Round
Squid, $2.25M Public Token Sale

QUICK BITES

Crypto hack losses fall below $1B in H1 2026.
Coinbase Chief Legal Officer Paul Grewal steps down.
White House defends Trump’s regulatory appointments.
Gauntlet raises $125M Series C from sole investor SBI Holdings.
UK Labour MPs push to permanently ban crypto political donations.
Polymarket files applications to offer regulated margin trading in US.
Swift launches blockchain ledger for tokenized deposit pilot with 17 banks.
Sony Bank gets conditional OCC approval for US trust bank to issue stablecoin.
HPC, Phantom urge CFTC to stop treating protocols like trad brokers, exchanges.

NOTEWORTHY READS & MEME

The Smart Ape’s read on bitcoin is in danger.
Mahone DeFi’s read on Aave and Monad’s Financial Layer.
William Mougayar’s read on This is How Ethereum Really Wins.

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