CFTC Issues No-Action Letter Letting Passive Software Providers Access Regulated Derivatives

The U.S. Commodity Futures Trading Commission issued a no-action letter on Thursday allowing passive software providers to avoid registering as introducing brokers if they limit their role to front-end software and meet a list of conditions.

“The CFTC issued a no-action letter for passive software providers.”

Decrypt

The CFTC said its Market Participants Division would not recommend enforcement against qualifying providers or their personnel for failing to register as introducing brokers or associated persons when facilitating trading with CFTC-registered firms and exchanges.

AMBCrypto

The letter covers software that lets users view market data, product offerings, and position information and submit orders for CFTC-regulated derivatives, including event contracts and perpetual contracts, directly to registered entities.

The guidance extends earlier Phantom relief granted in March to Phantom Technologies, whose self-custody wallet was cleared to connect users to regulated derivatives markets without registering as a broker.

In the same week, the CFTC’s action followed the Senate’s failed vote to advance the Digital Asset Market Clarity Act, and it came as SEC Chair Paul Atkins said the SEC was prepared to write crypto rules if the legislation stalled.

Industry advocates framed the CFTC letter as removing regulatory ambiguity for software developers building tools that connect users to regulated derivatives markets, with Digital Chamber CEO Cody Carbone writing on X, “Clarity from the CFTC!”

Blockchain Association CEO Summer Mersinger echoed that view, saying the CFTC staff action provides “important clarity,” and describing it as taking a “more functional approach to regulation.”

Bitcoin News

The CFTC action arrived 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.

CFTC Chair Michael Selig said in a post on X that “The CFTC is locked in and ready to ship its rules for the new frontier of finance,” while SEC Chair Paul Atkins said the SEC would act “with or without legislation.”

Alongside the CFTC no-action position, the SEC approved a temporary exemption allowing qualifying platforms to facilitate limited onchain trading of tokenized U.S. stocks through permissioned automated market makers and liquidity pools.

While the CFTC’s no-action position widens access for passive software, AMBCrypto reported it “does not offer any direct protection to developers facing criminal allegations like those brought in the Tornado Cash case.”A

“does not offer any direct protection to developers facing criminal allegations like those brought in the Tornado Cash case.”

AMBCrypto

AMBCrypto also described how the relief is meant to keep software providers from becoming active intermediaries, saying the provider is not allowed to control customer assets and decide on execution or signal buy/sell messages.A

The same AMBCrypto account said the CFTC letter only applies to registration under derivatives law and “does not bind the Justice Department or change other federal laws related to money transmission, sanctions, and money laundering.”A

Separately, Decrypt reported that under Thursday’s letter, staff will not recommend enforcement if providers stay within covered activities and meet conditions including user disclosures about relationships with registered entities, conflicts and fees, marketing policies, recordkeeping, insolvency or bankruptcy notices, and a filing agreeing to the terms.D

The CFTC’s approach also sits alongside the SEC’s “Innovation Exemption,” which Decrypt said was unveiled the same day, offering temporary, conditional relief for platforms seeking to facilitate on chain trading of tokenized U.S. stocks.D