The Commodity Futures Trading Commission (CFTC) has broadened regulatory relief for providers of “passive software” that connects users to regulated derivatives firms and exchanges.

In a no-action position issued 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 when facilitating trading with CFTC-registered firms and exchanges. Source: CFTC, announcement on X

The position could make it easier for crypto wallets and other applications to offer users access to regulated derivatives — including perpetual contracts and prediction markets — without the providers having to become CFTC-regulated introducing brokers themselves. Introducing brokers are registered intermediaries that route customer orders to futures brokers and exchanges, a status that carries ongoing registration and compliance obligations.

To qualify, providers must meet conditions that limit their role in transactions, including restrictions on exercising discretion over users’ orders — a boundary that keeps qualifying software in a connector role rather than one that directs customer trades.

The action extends a similar position granted to Phantom Technologies in March for its self-custodial crypto wallet software. Under that earlier letter, Phantom was permitted, subject to certain conditions, to provide and market software connecting users with registered futures brokers and exchanges without registering as an introducing broker. Source: CFTC

In July, Phantom and the Hyperliquid Policy Center pressed for broader protections, asking the CFTC 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.

Regulators move quickly after CLARITY Act setback

The move from the US regulator came two days after the CLARITY Act failed to advance in the Senate, where a cloture motion received 49 votes — short of the 60 needed to proceed to debate.

Following the vote, CFTC Chair Michael Selig and Securities and Exchange Commission Chair Paul Atkins signaled on Wednesday that their agencies would continue moving forward on crypto regulation under their existing authority.

“The CFTC is locked in and ready to ship its rules for the new frontier of finance,” Selig said in a post on X, while Atkins said the SEC would act “with or without legislation” to provide regulatory certainty for digital assets. Source: Paul Atkins on X

On Thursday, the agencies began following through. Alongside the CFTC’s no-action position, the SEC approved a temporary exemption allowing qualifying platforms to facilitate limited onchain trading of tokenized US stocks through permissioned automated market makers and liquidity pools. Taken together, the actions show both regulators using the tools already available to them — no-action relief and temporary exemptions — while the legislative route remains stalled. How many wallet and application providers end up qualifying under the CFTC’s conditions, and how the chairs’ promised rule work takes shape, will help determine how much regulated derivatives access reaches onchain.

Source: Cointelegraph