CFTC expands regulatory relief for passive trading software providers

The Commodity Futures Trading Commission (CFTC) issued a new no‑action position that broadens regulatory relief for providers of “passive software” that link users to CFTC‑registered derivatives firms and exchanges.

Key aspects of the CFTC’s position

• The CFTC will not recommend enforcement against qualifying software providers or their personnel for not registering as introducing brokers or associated persons.
• Providers must limit their role in transactions and cannot exercise discretion over users’ orders.
• The relief applies to crypto wallets and other applications that facilitate access to regulated derivatives, including perpetual contracts and prediction markets.

Background and precedent

The decision extends a similar no‑action letter granted to Phantom Technologies in March, which allowed its self‑custodial wallet software to connect users with registered futures brokers without requiring an introducing‑broker registration.

Industry response and regulatory context

Phantom and the Hyperliquid Policy Center have advocated for broader protections for non‑custodial wallet providers, seeking clarification on how existing rules apply to blockchain developers and on‑chain infrastructure used by regulated derivatives firms.

The CFTC’s action follows a recent Senate vote that halted progress on the CLARITY Act, after which CFTC Chair Michael Selig and SEC Chair Paul Atkins affirmed their agencies’ intent to continue crypto‑related rulemaking under existing authority.

Related regulatory developments

On the same day, the SEC approved a temporary exemption for qualifying platforms to conduct limited on‑chain trading of tokenized U.S. stocks via permissioned automated market makers and liquidity pools.