CFTC staff broadens no-action relief for “passive software” routing to regulated perps
The position reduces introducing-broker and associated-person registration risk for qualifying wallets and apps under strict non-discretionary conditions.
CFTC staff expanded no-action relief for “passive software” that connects users to CFTC-registered derivatives firms and exchanges, reducing introducing-broker registration risk for qualifying wallets and apps. The move lands days after the CLARITY Act stalled in the Senate and alongside an SEC temporary exemption for limited onchain tokenized-stock trading via permissioned pools.
CFTC staff is drawing a tighter line between “software that connects” and “intermediation that triggers registration.” On Thursday, the CFTC’s Market Participants Division issued a no-action position saying it would not recommend enforcement against qualifying “passive software” providers, or their personnel, for failing to register as introducing brokers or associated persons when facilitating trading with CFTC-registered firms and exchanges.
The practical target is the introducing-broker (IB) and associated-person (AP) perimeter. An IB typically solicits or accepts derivatives orders without holding customer funds. An AP is the human layer tied to that activity. The no-action posture does not rewrite the rulebook, but it lowers near-term enforcement risk for software providers that want to route users into regulated derivatives rails without becoming regulated intermediaries themselves.
The staff position is framed around enabling crypto wallets and other apps to offer access to regulated derivatives, explicitly including perpetual contracts and prediction markets, while staying outside IB registration. The catch is embedded in the label. To qualify, providers must meet conditions that limit their role in transactions, including restrictions on exercising discretion over users’ orders.
This is not coming out of nowhere. The staff action extends a similar no-action position granted to Phantom Technologies in March for its self-custodial wallet software. That earlier letter, subject to conditions, allowed Phantom to provide and market software connecting users with registered futures brokers and exchanges without registering as an introducing broker.
What “Passive” Likely Means for Wallet UX, Perps Access, and Prediction-Market Distribution
“Passive” is doing the work here. The staff summary points to a core constraint: the software provider cannot exercise discretion over user orders. That implies a UX and routing model where the user is the decision-maker and the software is closer to a conduit than a broker.
For builders, that likely narrows the design space. Order handling, smart order routing, and any feature that looks like the app is choosing venue, sizing, timing, or execution parameters on the user’s behalf is where the IB/AP risk usually creeps in. The staff language suggests the compliance lane is widest for non-custodial front ends that present access, route to registered counterparties, and keep the user in control of the order.
For traders, the immediate implication is distribution, not pricing. If major self-custodial wallets can surface access to CFTC-registered perps and prediction markets without taking on IB registration, regulated derivatives could show up in the same place users already custody and sign. That is a funnel shift. It changes where flow originates and who owns the customer relationship.
The Phantom precedent matters because it is a real-world template for how a self-custodial wallet can connect users to registered futures brokers and exchanges under conditions. The broader “passive software” framing suggests staff is willing to generalize that template beyond one named wallet, but only for providers that can stay inside the non-discretionary box.
Post-CLARITY Rulemaking Momentum and the SEC’s Parallel Tokenized-Stock Exemption
The timing is the tell. Two days before the no-action position, the CLARITY Act failed to advance in the US Senate after a cloture motion received 49 votes, short of the 60 needed to proceed to debate. After that vote, CFTC Chair Michael Selig and SEC Chair Paul Atkins signaled their agencies would continue moving under existing authority. Selig wrote on X, “The CFTC is locked in and ready to ship its rules for the new frontier of finance,” and Atkins said the SEC would act “with or without legislation” to provide regulatory certainty for digital assets.
On the same Thursday as the CFTC staff action, 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. The excerpted details stop at the high level. The platform set, duration, and the exact limits around “limited onchain trading” are not specified here.
Together, the two moves point to a near-term regulatory comfort zone: permissioned access paths and regulated counterparties, with software distribution allowed so long as it does not look like discretionary intermediation.
My Read: A Narrow Compliance Lane Opens—But the Conditions Will Decide Who Can Use It
The threshold that matters is the definition of “passive.” If the eligibility criteria draw bright lines around order routing, marketing or solicitation, and what counts as discretion over user orders, the winners are the wallets and front ends that can keep execution logic simple and push decisioning back to the user.
If the conditions end up narrow or operationally heavy, this stays a Phantom-style carveout that looks good on paper and small in distribution. If the conditions are workable and repeatable, regulated perps and prediction markets start to look like a product-integration problem rather than a registration problem, and that is when the shift becomes structural.
