The Commodity Futures Trading Commission’s Market Participants Division on September 17 issued a staff no-action position that broadens earlier relief for passive software providers. The framework allows qualifying developers to offer tools that connect users with registered futures commission merchants, introducing brokers and designated contract markets without triggering introducing-broker registration requirements, provided they meet detailed conditions.

The position, set out in Staff Letter 26-25, extends treatment first granted in March to Phantom Technologies for its self-custodial wallet software. That earlier letter applied only to the single firm. The new stance makes substantially similar relief available to any passive software provider that satisfies the stated requirements.

Scope of the Relief

Under the letter, division staff will not recommend that the Commission take enforcement action against a qualifying provider or its relevant personnel for failing to register as an introducing broker or as an associated person of an introducing broker. Protection is limited to the covered activities described in the letter.

Software qualifies when it enables users to trade with registered futures commission merchants, introducing brokers or designated contract markets. Users must remain customers or direct members of the regulated entity that handles their transactions. They must also be able to access that entity without relying on the provider’s software.

The framework covers passive interfaces that display market data, allow order submission and facilitate connectivity. It applies to tools used for regulated derivatives, including products such as perpetual contracts and event contracts offered on designated contract markets. A footnote in the materials indicates the approach is not limited to crypto-related applications.

Ten Conditions Providers Must Meet

Eligibility rests on a set of conditions that keep the software in a passive role. The provider and personnel engaged in covered activities must not be subject to statutory disqualification under the Commodity Exchange Act.

Customers must maintain a direct relationship with the registered intermediary or exchange. The provider cannot engage in advertising or promotional activity that would require prior National Futures Association approval if the firm were registered as an introducing broker.

To rely on the position, a provider must file a notice with the Market Participants Division. The filing includes an agreement to satisfy every condition and consent to the Commission’s jurisdiction to investigate and pursue enforcement for violations connected to the covered activities.

Additional requirements address disclosure of conflicts and fees, recordkeeping of user acknowledgments of risk disclosures, and written agreements with registered partners that allocate liability. Providers may collect transaction-based fees from users or registered counterparties.

Relief remains in effect only until the effective date of any Commission rule or guidance that addresses how introducing-broker requirements apply to the covered software activity. The division retains discretion to modify, suspend or terminate the position.

Context After Legislative Setback

The staff letter arrived two days after the Senate rejected cloture on the Digital Asset Market CLARITY Act by a 49-50 vote, short of the 60 votes needed to proceed to debate. Following that outcome, CFTC Chairman Michael Selig stated that the agency would continue work under its existing statutory authorities.

On the same day as the CFTC announcement, the Securities and Exchange Commission issued a temporary, conditional innovation exemption for certain venues offering onchain trading of tokenized National Market System stocks through permissioned automated market makers and liquidity pools. Both actions signal continued agency activity while comprehensive market-structure legislation remains stalled.

Solana Policy Institute General Counsel Patrick Wilson described the CFTC move as providing builders greater clarity on connecting users to regulated derivatives markets without being treated as introducing brokers. Phantom CEO Brandon Millman noted that the March letter for the company’s software had helped chart a path for non-custodial providers.

Limits of the Staff Position

The no-action letter is not a formal exemption from the Commodity Exchange Act and does not bind the full Commission or other divisions. It does not alter underlying legal requirements for registered entities, which remain responsible for their own compliance obligations.

Fraud, manipulation, unlawful solicitation or breaches of the letter’s conditions remain subject to enforcement. The position also does not address state-level registration or licensing requirements.

Developers that take custody, recommend specific trades, exercise routing discretion or serve as the sole gateway to a regulated firm fall outside the passive model. The relief is confined to software that functions as a technical interface while leaving account relationships, asset control and trade execution with registered intermediaries.