CFTC Issues No-Action Position for Trading Software Providers
The agency said qualifying software providers can connect users to registered derivatives venues without broker registration if they meet 10 conditions.
- On Thursday, The Commodity Futures Trading Commission's Market Participants Division issued Staff Letter 26-25, allowing providers of "passive software" to connect users to regulated derivatives firms without registering as introducing brokers.
- This expansion extends relief previously granted in March to Phantom Technologies in Letter 26-09. The division then heard from "other similarly situated providers of passive software" seeking similar relief.
- Under the "custodial" model, providers cannot hold user assets or exercise discretion over routing. The letter attaches 10 conditions, including a requirement that venues sign an undertaking making them "jointly and severally liable" for the provider's violations.
- Following the CLARITY Act's failure in the Senate, where a cloture motion received 49 votes short of the 60 needed, CFTC Chair Michael Selig and Securities and Exchange Commission Chair Paul Atkins signaled they would continue moving forward under existing authority.
- The position is the Market Participants Division's alone, "not binding on the Commission," and lasts only until a CFTC rule on software developer registration takes effect, providing certainty for digital assets "with or without legislation.
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32 Articles
Wallets Can Offer Regulated Perps Without a Broker License, CFTC Staff Says
The relief Phantom won in March is now available to any provider of "passive software" that meets the letter's conditions. One of them requires every registered venue or broker it plugs into to sign an undertaking accepting joint liability for what the software does.
Cointelegraph
The New York LedgerCFTC Issues No-Action Position for Trading Software Providers
The CFTC expanded its no-action position for passive software providers, potentially making it easier for crypto apps to offer access to regulated derivatives and prediction markets.
CFTC Frees Crypto Wallet and DeFi App Developers From Broker Rules
The CFTC's Market Participants Division extended its passive-software no-action relief from Phantom Technologies alone to any wallet, DeFi interface, or app that routes trades to regulated futures, perpetuals, and prediction markets. The relief, issued as Staff Letter 26-25 on September 17, holds until the Commission finalizes formal rulemaking.
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