CFTC Expands No-Action Relief for Passive Software Providers
CFTC Expands No-Action Relief for Passive Software Providers
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Key Points
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The relief is broadly available to similarly situated passive-software providers, unlike the earlier position, which applied only to Phantom Technologies.
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Eligible providers may market their software and their relationships with registered futures commission merchants, introducing brokers and designated contract markets, not merely offer the software’s technical interface.
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Users may transact directly through a designated contract market or through a registered futures commission merchant or introducing broker, while funds and other property securing derivatives positions must remain with the applicable clearing structure rather than the software provider.
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The CFTC’s legal rationale reflects the broad scope of existing introducing-broker rules: the agency has long interpreted “soliciting and accepting” orders to cover activities beyond literal solicitation or acceptance, citing an August 3, 1983, Federal Register release.
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The CFTC has a longstanding precedent for technology-vendor relief, having issued related no-action positions for technology service providers as far back as 2002.
The CFTC has broadened relief for passive software makers, clearing the path for wallet developers and other tech vendors to offer derivatives trading without broker registration. Under Staff Letter 26-25, eligible providers can connect users to regulated markets without facing enforcement action for skipping registration as introducing brokers. Altcoin Buzz reported the move expands a March 2026 position that only covered Phantom Technologies, now opening the door to any similarly situated software provider.
The relief hinges on strict guardrails: software cannot make trading decisions, push buy-or-sell signals, or hold customer funds. Users must transact through registered futures commission merchants, introducing brokers, or designated contract markets. Crypto Rank noted the expansion includes DeFi interfaces and self-custodial crypto wallets, marking a significant step toward regulatory clarity for the industry.
From One Vendor to Many: Expanding Phantom's Exemption
In March 2026, the CFTC granted Phantom Technologies a no-action letter allowing its wallet to connect users to derivatives markets without broker registration. The agency has now universalized that relief. Finance Feeds reported the new position applies to any developer of passive software meeting the same criteria, eliminating a one-company carve-out and reducing uncertainty for technology vendors across crypto and traditional markets.
Software providers can now openly market their products and partnerships with regulated intermediaries, rather than quietly offering technical infrastructure. Crypto News highlighted that this openness lets developers compete openly in the market while maintaining the boundary between software and regulated financial services.
What Passive Software Can and Cannot Do
Eligible providers must stay in a narrow lane. They can display market data, build user interfaces, and route orders to registered intermediaries. They cannot execute trades themselves, send explicit trading signals, or hold customer assets. Altcoin Buzz noted the CFTC's position hinges on software providers remaining passive conduits, not active market participants.
Customer funds backing derivatives positions must stay with the clearing structure—typically a futures commission merchant or designated contract market—not with the software maker. This requirement ensures assets remain segregated and protected under existing regulatory safeguards, preserving the CFTC's core mandate for customer protection.
A Legal Foundation Stretching Back Decades
The CFTC's rationale rests on a broad reading of broker registration rules. Agency staff cited an August 3, 1983 Federal Register release showing the commission has long interpreted "soliciting and accepting" orders to cover activities beyond literal solicitation. Crypto News explained this gives the agency legal room to exclude passive software from broker definitions without rewriting the rulebook.
Tech-vendor relief is not new. The CFTC has issued similar no-action letters for technology service providers since 2002. Tron Weekly noted this 2026 expansion follows the agency's established pattern of carving out technology infrastructure from broker rules while keeping registration requirements intact for entities that solicit, accept, or manage customer risk.
What This Means for Crypto Derivatives Access
The relief simplifies the path for crypto wallets and DeFi platforms to integrate regulated derivatives trading. Tron Weekly observed the expansion removes a legal roadblock that once forced developers to choose between building derivatives features or staying compliant. Now they can offer both—provided they partner with regulated intermediaries.
Users gain easier access to institutional-grade derivatives without moving funds off self-custodial wallets. Finance Feeds highlighted this as a win for both developers and traders, allowing crypto-native platforms to compete with traditional brokers while the CFTC preserves oversight of who takes customer orders and holds customer money.
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