CFTC Extends Regulatory Relief for Passive Trading Software Firms

The US Commodity Futures Trading Commission (CFTC) has issued a no-action position expanding regulatory relief for what it describes as “passive software” providers—entities that connect users to CFTC-registered derivatives firms and exchanges without taking on the role of regulated intermediaries.

In a no-action letter released 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, provided they meet specific conditions that limit discretion over users’ trading decisions. The move is expected to lower compliance friction for crypto wallets and other applications that want to link users to regulated venues, including derivatives such as perpetual contracts and prediction markets.

Key takeaways

• The CFTC’s no-action stance covers “passive software” that facilitates trading with CFTC-registered firms and exchanges without triggering introducing broker or associated person registration—if conditions are met.
• Eligibility hinges on limiting provider discretion, including restrictions on exercising judgment over users’ orders.
• The guidance builds on an earlier relief letter for Phantom Technologies’ self-custodial wallet software, extending the framework to a broader set of passive software use cases.
• The announcement arrives shortly after the CLARITY Act failed to advance in the US Senate, while CFTC and SEC leadership reiterated plans to proceed under existing regulatory authority.

What the CFTC is granting, and who it’s for

The Thursday no-action position is aimed at software providers that act as a technical bridge between end-users and regulated derivatives infrastructure. According to the CFTC, the Market Participants Division will not recommend enforcement for qualifying providers—or their personnel—if they facilitate trading with CFTC-registered entities and exchanges, but do not cross into intermediary functions that would require registration as an introducing broker or an associated person.

The crux of the relief is that the software must remain “passive.” The CFTC’s letter indicates that qualification requires conditions designed to keep the provider’s role constrained—for example, by restricting how much discretion the software provider can exert over user orders.

This distinction matters for crypto product design. Many wallets, onchain apps, and trading interfaces can be configured to route users toward regulated marketplaces. Without relief, providers may face the argument that they are effectively brokering or advising, even if they are not taking custody of assets or manually placing trades themselves.

From Phantom’s wallet software to a wider passive-software rule

The new position extends a similar approach previously granted by the CFTC. In March, the agency issued a no-action letter to Phantom Technologies covering its self-custodial crypto wallet software, subject to conditions. The earlier letter allowed Phantom—again, under defined constraints—to provide and market software that connects users with registered futures brokers and exchanges without registering as an introducing broker.

In July, Phantom and the Hyperliquid Policy Center also advocated for broader protections from the CFTC. Their request focused on shielding non-custodial wallet providers from introducing broker requirements and clarifying how existing rules apply when blockchain developers and regulated derivatives firms use onchain infrastructure. The Thursday move suggests at least part of that line of reasoning is being carried forward: the CFTC is treating certain software-mediated connections to regulated trading venues as distinct from regulated brokerage activity.

While the no-action letters are not blanket permission for every conceivable integration, the pattern is clear: regulators appear willing to carve out compliance space for interfaces that limit discretion and do not function as intermediaries in the traditional sense.

Regulatory momentum after the CLARITY Act setback

The CFTC’s decision comes just two days after the CLARITY Act failed to advance in the US Senate. A cloture motion received 49 votes—short of the 60 needed to move forward to debate, according to the reporting referenced in the original coverage.

After that vote, both CFTC Chair Michael Selig and Securities and Exchange Commission Chair Paul Atkins indicated their agencies would keep working on crypto-related regulation using existing authority. Selig said the CFTC is “locked in and ready to ship its rules for the new frontier of finance,” as referenced in a post on X. Atkins said the SEC would act “with or without legislation” to provide regulatory certainty for digital assets, also referenced via X.

Thursday’s actions reflect that stated resolve. Alongside the CFTC’s no-action position, the SEC approved a temporary exemption permitting qualifying platforms to facilitate limited onchain trading of tokenized US stocks through permissioned automated market makers and liquidity pools, according to the cited coverage.

Why this matters for crypto wallets and derivatives access

For builders and operators, the operational takeaway is that the compliance burden may be reduced when software design keeps the provider away from discretionary trading decisions. In practical terms, the CFTC’s relief signals that developers can build user-facing routing or connectivity layers—potentially including wallet functionality or other application interfaces—without automatically inheriting introducing broker registration obligations, so long as they adhere to the conditions laid out in the no-action framework.

For traders and users, the downstream effect could be smoother access to regulated derivatives-like products through familiar interfaces. If software providers can integrate with CFTC-regulated firms and exchanges more easily, users may encounter fewer friction points when seeking exposure to compliant venues—whether those venues involve perpetual derivatives or other CFTC-regulated market structures such as prediction markets.

Still, the relief is not unlimited. The CFTC’s letter makes clear that qualification depends on meeting the “passive” requirements, including limits on discretion over orders. Observers will likely watch how broadly “passive” is interpreted in future guidance and how regulators evaluate real-world products where user interaction can blur the line between simple routing and active brokerage decision-making.

Next, the industry will be looking for further clarity on how these “passive software” principles apply across different architectures—especially as more crypto applications seek integration with regulated derivatives platforms—while also monitoring whether lawmakers’ failure to move the CLARITY Act shifts the pace and direction of agency rulemaking.