The U.S. Commodity Futures Trading Commission on Thursday issued a new no-action position that broadens regulatory relief for "passive software" providers. The change gives crypto wallets, DeFi wallets, and other applications a clearer path to connect users to regulated derivatives exchanges and prediction markets without having to register with the CFTC as introducing brokers.
CFTC broadens no-action protection for passive software
In its notice, the CFTC’s Division of Market Participants said it would not recommend enforcement action against qualifying passive software providers or their personnel solely for failing to register as introducing brokers or associated persons, so long as they help users transact with CFTC-registered futures brokers or exchanges.
The filing marks the first time the agency has expanded this type of protection beyond the March no-action relief granted to Phantom Technologies, extending it to a wider software ecosystem.
Conditions apply: no discretion, no custody, no handling of funds
To qualify, software providers must follow a set of limits. The core standard is that they cannot exercise discretion over user orders, cannot touch customer funds, and can only provide a passive access channel.
As described in the source material, the wallet in this setup acts as a bridge. It does not operate on the user’s behalf, does not take control of funds, and does not earn revenue through fee-sharing as an intermediary.
From Phantom’s case to a broader industry framework
In March, the CFTC issued a no-action letter to Phantom Technologies that allowed its self-custodial crypto wallet software, under specific conditions, to direct users to registered futures brokers and exchanges without registration.
In July, Phantom and Hyperliquid Policy Center asked the CFTC for broader protection. Their request sought to exclude non-custodial wallet providers from introducing broker requirements and to clarify how existing rules apply to blockchain developers and regulated derivatives firms using on-chain infrastructure.
The source frames the expanded relief as a response to industry lobbying. Wallet providers and on-chain derivatives platforms no longer face the same registration pressure simply for letting users click through to compliant trading venues. For applications that combine on-chain wallets with centralized derivatives platforms, the move amounts to a tangible easing of regulatory pressure.
Action follows CLARITY setback in the Senate
The timing is notable. Two days earlier, the CLARITY bill failed to move forward in the Senate after a cloture motion received 49 votes, short of the 60 needed.
After that vote, CFTC Chair Michael Selig and U.S. Securities and Exchange Commission Chair Paul Atkins each posted public statements on the same day. According to the source, Selig wrote on X that the "CFTC has already locked onto the target and is preparing rules for the new frontier of finance," while Atkins said the SEC would act "with or without legislation" to provide regulatory certainty for digital assets.
On Thursday, the two agencies moved almost in parallel. The CFTC released its passive software relief, while the SEC approved temporary relief for tokenized U.S. stock trading, allowing qualified platforms to conduct limited on-chain trading through permitted automated market makers and liquidity pools.
The next question is where "passive" ends
Even with the broader scope, the new no-action position still draws its line at passive access. The source points to a key unresolved issue: whether the CFTC will go on to define more clearly where passive software ends and active intermediation begins.
That question matters for wallet design. If a wallet includes quote aggregation, liquidity routing, or yield features, it is still unclear whether the software would remain within the passive category. The answer could shape how far crypto wallets can go in offering deeper on-chain financial services without crossing compliance lines.
The source also notes that the SEC’s and CFTC’s separate rule-by-rule moves have yet to form a single coherent framework for wallets, DEXs, and on-chain derivatives.