CFTC Clears Passive Crypto Trading Software From Broker Rule

CFTC staff said on September 17 that providers of passive crypto trading software will not face enforcement for skipping broker registration when they connect users to regulated derivatives markets.

The Commodity Futures Trading Commission’s Market Participants Division issued a no-action position, Release 9300-26, stating it will not recommend action against qualifying providers or their personnel for failing to register as introducing brokers or associated persons. The software must connect users exclusively to CFTC-registered firms and exchanges: futures commission merchants, introducing brokers, or designated contract markets.

What the software may and may not do

Qualifying software can route orders, display market data, and provide the plumbing that lets a user interact with regulated exchanges. It cannot hold custody of assets, generate buy or sell signals, or make trading decisions on a user’s behalf. The relief ends the moment a provider adds trading discretion, custody, or signal generation.

The position spares software companies the costs of introducing broker registration, which includes capital requirements, compliance obligations, and ongoing reporting duties. In practice, the move could make it easier for crypto wallets and apps to offer access to regulated derivatives, including perpetual contracts and prediction markets, without becoming brokers themselves.

Relief broadens a March letter

Release 9300-26 extends relief first granted in March to Phantom Technologies, Inc., a self-custodial crypto wallet software provider, through Staff Letter 26-09. Phantom and the Hyperliquid Policy Center petitioned the CFTC in July for broader protections for non-custodial wallet providers.

The decision arrives two days after the CLARITY Act failed to advance in the Senate, with a cloture motion receiving 49 votes against the 60 needed. CFTC Chair Michael Selig and SEC Chair Paul Atkins said on September 16 that their agencies would continue moving on crypto regulation under existing authority. Atkins wrote in a post on X that “with or without legislation, we will act decisively within the SEC’s statutory authority to deliver certainty for American investors and for the entrepreneurs shaping our technological future.”

The relief is a staff interpretation rather than a rule, and can be modified or withdrawn. It also does not address state-level registration and licensing requirements.