Fintech
The Commodity Futures Trading Commission (CFTC) has taken a significant step to support non-custodial software developers. On September 17, the agency’s Market Participants Division (MPD) issued a staff letter granting no-action relief to providers of passive software. This means the CFTC will not pursue enforcement action against these providers or their personnel for failing to register as introducing brokers or associated persons, provided certain conditions are met. The relief applies specifically to the provision and marketing of software that facilitates trading by users with registered futures commission merchants, introducing brokers, and designated contract markets. This move builds on a similar no-action position from March, which was granted to Phantom Technologies, a developer of self-custodial cryptocurrency wallet software. Phantom CEO Brandon Millman praised the decision, stating that the March relief created a path for non-custodial software providers to connect users with regulated markets. He noted that the CFTC has now opened that path to other providers, calling it “a win for the whole industry.” Millman emphasized that this approach pairs consumer-protective software with regulated partners, giving more people safe access to financial services.
The CFTC’s action is expected to expand crypto and prediction market trading via online platforms, as reported by Bloomberg. Previously, companies that solicited or accepted trade orders and earned fees might have needed to register as brokers. The new relief clarifies that passive software providers—those that do not hold user funds or make trading decisions—can operate without such registration. Ryan VanGrack, vice chair at Coinbase, welcomed the news, noting that after years of regulatory standstill, meaningful relief has arrived. He cited both the SEC’s Innovation Exemption and the CFTC’s No-Action Relief as signs that the regulatory tide has turned. This development is a positive step for the crypto industry, offering greater regulatory clarity for non-custodial software developers and potentially boosting innovation and access to regulated financial markets.