US CFTC Expands Broker Registration Exemption for Crypto Wallet Providers, Broadening March Relief

The US Commodity Futures Trading Commission (CFTC) on the 17th announced a no-action position exempting providers of "passive software" that does not participate in users' order decisions from intermediary broker registration requirements. The relief covers providers and sellers of software that connects users to registered futures commission merchants (FCMs) and designated contract markets, expanding the relief granted in March to Phantom Technologies—a self-custodial crypto wallet provider—to all qualifying providers generally.

A no-action position is a document in which the regulator indicates it will not recommend enforcement action for specified conduct. Conditions for receiving the exemption include restricting the exercise of discretionary authority over user orders and not holding user assets.

Under previous rules, firms that solicited or accepted trade orders, transmitted them to FCMs, and received commission-based compensation were required to register as intermediary brokers. The new guidance makes it easier for applications such as crypto wallets to provide access to regulated derivatives—including perpetual futures and prediction markets—without becoming CFTC-registered intermediary brokers.