CFTC expands regulatory relief for passive trading software providers

The Commodity Futures Trading Commission (CFTC) has expanded regulatory relief for “passive software” providers that connect users to regulated derivatives firms and exchanges.

In a no-action position issued Thursday, the agency’s Market Participants Division said it 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.

The position could make it easier for crypto wallets and other apps to offer access to regulated derivatives, including perpetual contracts and prediction markets, without becoming CFTC-regulated introducing brokers themselves.

Source: CFTC

To qualify, providers must meet conditions limiting their role in transactions, including restrictions on exercising discretion over users’ orders.

The action extends a similar position granted to Phantom Technologies in March for its self-custodial crypto wallet software. The earlier letter allowed Phantom, subject to certain conditions, to provide and market software connecting users with registered futures brokers and exchanges without registering as an introducing broker.