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The CFTC moved Thursday to ease a real pain point for crypto wallet developers. The agency’s Market Participants Division said it won’t recommend enforcement against qualifying “passive software” providers that connect users to regulated derivatives markets — even if those providers haven’t registered as introducing brokers.
That’s a pretty big deal for anyone building a crypto wallet or app that touches perpetual contracts, prediction markets, or similar products. Until now, the line between “we just built the software” and “we’re brokering trades” was murky enough to scare off a lot of developers. The new no-action position doesn’t erase that line, but it gives software providers a clearer path forward — as long as they stay hands-off. Specifically, they can’t exercise discretion over users’ orders. No steering. No interference. Just the plumbing.
Not a free pass, though.
Phantom Got There First, Now Others Can Follow
Phantom Technologies had already won a similar carve-out back in March. The CFTC let Phantom’s self-custodial wallet software connect users to registered futures brokers without forcing Phantom itself to register as a broker. Thursday’s move basically takes that Phantom exemption and broadens it — opening the door for other software providers to claim the same kind of relief, provided they meet the same conditions.
Phantom and the Hyperliquid Policy Center had been pushing hard for exactly this kind of expansion. Back in July, both organizations urged the CFTC to formally exempt non-custodial wallet providers from introducing broker requirements. They also pushed for clearer rules around how existing regulations apply to blockchain developers and to regulated firms that use onchain infrastructure. The CFTC didn’t go as far as a formal rulemaking, but the no-action position moves in the direction they wanted.
The key distinction the CFTC seems to be drawing here is custody. If your software doesn’t hold users’ funds, and you’re not making calls on how those funds get deployed, you’re probably not a broker in any meaningful sense. The agency appears to agree — at least enough to say it won’t come after you for skipping the broker registration process.
CLARITY Act Stalls, Agencies Press On Anyway
The timing matters. The CLARITY Act, which would have given the industry a legislative framework to work from, failed to advance in the Senate. The cloture motion got just 49 votes — 11 short of the 60 needed to move forward. That’s a real setback for anyone hoping Congress would draw the lines clearly.
But CFTC Chair Michael Selig and SEC Chair Paul Atkins have both said they’ll keep pushing crypto regulation forward using the authorities they already have. Thursday’s no-action position is basically that in action — the CFTC doing what it can without waiting for Congress to sort itself out.
And the SEC moved the same day. The commission granted a temporary exemption for platforms that want to facilitate limited onchain trading of tokenized US stocks, specifically through permissioned automated market makers and liquidity pools. Two agencies, same day, both nudging the regulatory framework toward digital assets. Whether that’s coordinated or just coincidence is unclear, but it’s hard to miss.
The SEC’s move on tokenized stocks is its own story. Letting platforms trade tokenized versions of US equities through onchain mechanisms — even on a temporary, limited basis — is a significant step. It’s the kind of thing that would have seemed far-fetched a few years ago. The fact that it’s happening through a temporary exemption rather than a formal rule probably reflects just how fast the space is moving and how cautious regulators still are about locking in permanent frameworks before they fully understand what they’re dealing with.
For crypto wallet developers, the CFTC’s no-action position probably removes a genuine obstacle. Registering as an introducing broker isn’t just paperwork — it comes with ongoing compliance obligations, capital requirements, and regulatory scrutiny that most software startups aren’t built to handle. If you can skip that process because your wallet is genuinely passive, you can move faster, stay leaner, and offer users access to more sophisticated financial products without the overhead.
The risk, of course, is that “passive” is doing a lot of work in this framework. The CFTC’s conditions are real constraints. Any provider that starts making judgment calls about how orders get routed or executed is going to find itself outside the safe harbor pretty quickly. And the no-action position isn’t a formal rule — it can be revisited, revised, or withdrawn. It’s a signal, not a statute.
Still, for a sector that’s spent years operating in genuine legal uncertainty, a clear signal from the CFTC is worth something. Phantom proved the model works. The Hyperliquid Policy Center spent months lobbying for the expansion. And the CFTC, working around a stalled Congress, delivered a version of what they asked for.
The SEC’s temporary exemption for tokenized stock trading platforms went live the same day.
Frequently Asked Questions
What does the CFTC’s no-action position mean for crypto wallet providers?
It means qualifying passive software providers can connect users to regulated derivatives markets — including perpetual contracts and prediction markets — without registering as introducing brokers, as long as they don’t exercise discretion over users’ orders.
Which company previously received a similar CFTC exemption?
Phantom Technologies received a comparable no-action position in March, allowing its self-custodial wallet software to link users with registered futures brokers without requiring broker registration.
Why It Matters
This decision by the CFTC could significantly lower the barriers to entry for developers in the rapidly evolving crypto wallet space, fostering innovation and competition in the derivatives market. By clarifying the regulatory stance on passive software providers, the agency may encourage the development of more diverse financial products, further integrating cryptocurrency into mainstream finance. This move also highlights the ongoing regulatory evolution surrounding digital assets, as authorities seek to balance innovation with risk management.
