CFTC Grants Broader Pass for Crypto Apps Linking to Derivatives Markets

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The U.S. Commodity Futures Trading Commission issued a no-action position on Thursday allowing providers of “passive software” to connect users to regulated derivatives markets without registering as introducing brokers or associated persons. The guidance expands relief first granted to crypto wallet provider Phantom Technologies in March, creating a broader framework for developers of wallets and trading apps. To qualify, providers must meet conditions including restrictions on exercising discretion over users’ orders, along with disclosure, recordkeeping and marketing requirements. The action came two days after the CLARITY Act failed to advance in the Senate, and on the same day the SEC unveiled an Innovation Exemption for tokenized U.S. stock trading. Industry advocates including the Digital Chamber and Blockchain Association welcomed the move as removing a major regulatory ambiguity that had chilled software innovation in derivatives markets.

Key Elements

Software developers building crypto wallets and trading interfaces just got a clearer path to connect users with regulated U.S. derivatives markets without becoming registered brokers themselves.

The Commodity Futures Trading Commission issued a no-action position Thursday stating that providers of what it calls “passive software” will not face enforcement for failing to register as introducing brokers or associated persons, provided they meet certain conditions. The guidance from the agency’s Market Participants Division covers applications that let users view market data, product offerings and position information, and submit orders for CFTC-regulated derivatives directly to registered entities.

The framework applies to products including perpetual contracts and prediction markets, and it marks an expansion of relief first granted in March to Phantom Technologies, the self-custodial crypto wallet provider. That earlier letter allowed Phantom to offer and market software connecting users with registered futures brokers and exchanges without registering as an introducing broker.

“The Division believes that a no-action position for all passive software providers on substantially the same terms as that provided to the software developer in Letter 26-09 is warranted,” the CFTC letter stated.

To qualify, providers must satisfy conditions aimed at keeping their involvement in transactions limited. Key among them: restrictions on exercising discretion over users’ orders. The distinction is critical because it separates software that merely routes users to regulated venues from software that actively decides, manages or steers trades on a user’s behalf. Additional conditions include user disclosures about relationships with registered entities, conflicts and fees; marketing policies; recordkeeping requirements; insolvency or bankruptcy notices; and a filing agreeing to the terms.

Industry advocates framed the move as long-awaited clarity for developers building tools that connect users to regulated derivatives markets.

“Clarity from the CFTC!” Digital Chamber CEO Cody Carbone wrote on X. “Software providers that build tools connecting users to registered FCMs/DCMs no longer have to register as brokers just for building the interface. This removes a major regulatory ambiguity that’s chilled software innovation in derivatives markets.”

Patrick Wilson, general counsel at the Solana Policy Institute, described the shift as significant because it transforms what had been Phantom-specific relief into a framework other software providers can build around. He said the criteria for connecting users to regulated derivatives markets without being classified as a broker have become much clearer.

Blockchain Association CEO Summer Mersinger offered a similar assessment, saying the CFTC’s Market Participants Division is “taking a more functional approach to regulation—one that looks at what a technology provider actually does rather than treating software itself as a traditional financial intermediary.”

Regulators Move After Legislative Setback

The CFTC action came just two days after the CLARITY Act failed to advance in the Senate, where a cloture motion received 49 votes, short of the 60 needed to proceed to debate. The legislation would have created a federal market-structure framework for digital assets and clarified the roles of the CFTC and the Securities and Exchange Commission.

Following that vote, both agency chairs signaled they would continue regulatory work using existing authority. CFTC Chair Michael Selig said the agency is “locked in and ready to ship its rules for the new frontier of finance,” while SEC Chair Paul Atkins said his agency would act “with or without legislation” to provide regulatory certainty for digital assets.

Thursday’s developments followed through on that posture. The CFTC no-action position arrived the same day the SEC unveiled an “Innovation Exemption” allowing qualifying platforms to facilitate limited onchain trading of tokenized U.S. stocks through permissioned automated market makers and liquidity pools. Under that framework, qualifying Tokenized Securities Venues can operate without being treated as exchanges, with the exemption scheduled to last five years.

Coinbase Vice Chairman Ryan VanGrack captured the sense of sudden movement, describing the agencies’ actions as coming “gradually, then suddenly” after years of regulatory standstill. “After years of regulatory standstill, we just saw meaningful relief in a matter of hours: SEC Innovation Exemption and CFTC No-Action Relief,” he wrote on X. “The tide has officially turned.”

A Blueprint, Not a Blank Check

Despite the industry’s enthusiasm, the scope of the relief is not unlimited. “Passive” software is not synonymous with “anything goes,” and builders will need to ensure their product behavior aligns with the framework, particularly around order handling and the discretion limits.

Phantom and the Hyperliquid Policy Center had previously urged the CFTC to modernize how rules apply to onchain infrastructure, arguing that non-custodial wallet providers should receive clearer protections from introducing broker requirements. The agency’s new position suggests regulators are acknowledging that the technical layer of trading—software connectivity—can exist without replicating the role of a traditional broker.

For developers, the immediate takeaway is to treat the no-action position as a compliance blueprint. Teams integrating regulated derivatives access should document how their software operates, what actions are user-driven, and what guardrails prevent the app from effectively acting like a broker.

There is also a caveat: no-action positions differ from formal rules. They can be withdrawn if the commission’s composition or policy direction changes. One industry commission could reverse course. The more firms that build around the framework, however, the harder such a reversal would become

Selig had indicated in May that he wanted to convert the Phantom-specific relief into a formal rule, though specific follow-up action has yet to materialize. For now, the no-action position provides a workable path for wallet developers and trading apps to integrate regulated derivatives access without the compliance burden that typically accompanies broker registration.

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Source: finance.biggo.com