CFTC expands relief for passive software providers in derivatives access

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CFTC expands software relief

Highlights

CFTC issues a no-action position expanding relief for passive software providers facilitating access to CFTC-registered firms without requiring registration as introducing brokers.
The relief builds on a March letter to Phantom Technologies, extending similar exemption conditions to other non-custodial wallet software providers connecting users to regulated futures brokers and exchanges.
After the CLARITY Act stalls in the Senate with just 49 votes, the CFTC and SEC signal they will proceed with digital asset regulation using existing authority, including new limited onchain trading exemptions.

Broader access framework for passive software

As reported by Cointelegraph, citing the CFTC, the agency’s Market Participants Division says in a no-action position issued Thursday that it will not recommend enforcement against qualifying passive software providers, or their personnel, for failing to register as introducing brokers or associated persons when they facilitate trading with CFTC-registered firms and exchanges.

The relief applies to providers that meet conditions designed to limit their role in transactions, including restrictions on exercising discretion over users’ orders. The position is aimed at software that serves as a connection layer rather than an intermediary taking an active role in trade execution or customer handling.

The action builds on a similar no-action position granted to Phantom Technologies in March for its self-custodial crypto wallet software. That earlier letter allows Phantom, subject to conditions, to provide and market software linking users to registered futures brokers and exchanges without registering as an introducing broker.

Phantom and the Hyperliquid Policy Center also press the CFTC in July for broader protections, asking the regulator to shield non-custodial wallet providers from introducing broker requirements and to clarify how existing rules apply to blockchain developers and regulated derivatives firms using onchain infrastructure.

Regulatory push continues after CLARITY Act setback

The CFTC move comes two days after the CLARITY Act fails to advance in the Senate, with a cloture motion receiving 49 votes, below the 60 needed to move to debate. The setback leaves federal agencies to keep shaping crypto oversight through existing authority rather than new legislation.

Following the vote, CFTC Chair Michael Selig and Securities and Exchange Commission Chair Paul Atkins signal on Wednesday that their agencies will continue moving ahead on digital asset regulation. Selig says in a post on X that the CFTC is ready to deliver rules for the sector, while Atkins says the SEC will act with or without legislation to provide regulatory certainty for digital assets.

On Thursday, the agencies begin putting that approach into practice. Alongside the CFTC relief, the SEC approves a temporary exemption allowing qualifying platforms to facilitate limited onchain trading of tokenized U.S. stocks through permissioned automated market makers and liquidity pools.

In our earlier article on the SEC’s Innovation Exemption for tokenized U.S. stocks, we explained how the regulator created a time-limited pathway for certain venues to offer stock tokens under strict investor-protection conditions. The piece highlighted requirements that token holders retain equivalent shareholder rights—such as dividends and voting—and noted that the exemption advances the SEC’s approach to defining digital-asset market rules through existing authority after the CLARITY Act failed to move forward.

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