- The CFTC issued a no-action letter for passive software providers.
- The letter covers software that gives users access to event contracts, perpetual contracts, and other regulated derivatives.
- The position extends earlier Phantom relief to other providers that meet the agency’s conditions.
The Commodity Futures Trading Commission issued new guidance Thursday for crypto apps seeking to offer access to regulated derivatives markets. In the no-action letter, the agency’s Market Participants Division said passive software providers can avoid registering as introducing brokers if they limit their role to front-end software and meet a list of conditions.
This matters for wallet developers and trading apps because broker registration brings significant compliance requirements. The CFTC letter gives them a path to connect users to registered derivatives markets without acting as the intermediary handling the trade.
The letter covers software that lets users view market data, product offerings, and position information, and submit orders for CFTC-regulated derivatives directly to registered entities. It extends relief first granted in March to Phantom Technologies, whose self-custody wallet was cleared to connect users to regulated derivatives markets without registering as a broker.
Staff will not recommend enforcement against passive software providers for failing to register as introducing brokers if they stay within covered activities and meet conditions. Those conditions include user disclosures about relationships with registered entities, conflicts and fees, marketing policies, recordkeeping, and insolvency notices.
Industry advocates framed the CFTC letter as providing needed clarity for software developers. Digital Chamber CEO Cody Carbone wrote on X: “Clarity from the CFTC! Software providers that build tools connecting users to registered FCMs/DCMs no longer have to register as brokers just for building the interface.”
Blockchain Association CEO Summer Mersinger said the CFTC staff action provides important clarity. “By extending its previous no-action relief to similarly situated passive software providers, the CFTC’s Market Participants Division is taking a more functional approach to regulation,” Mersinger said.
The CFTC action came the same day the SEC unveiled an Innovation Exemption for tokenized U.S. stocks. Both moves followed the Senate’s failed vote to advance the Digital Asset Market Clarity Act.
CFTC Chair Michael Selig directed staff in August to explore crypto market-structure rules if Congress did not pass the Clarity Act. Coinbase Vice Chairman Ryan VanGrack wrote on X: “After years of regulatory standstill, we just saw meaningful relief in a matter of hours. The tide has officially turned.”
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