CFTC tells crypto apps they can hold the wheel 🛞—just don't actually drive

The Commodity Futures Trading Commission on Thursday widened a regulatory safe harbor for so-called passive software providers that link users to CFTC-registered derivatives firms and exchanges, issuing a no-action position that could make it easier for non-custodial crypto wallets and apps to offer access to perpetual contracts and prediction markets without themselves registering as introducing brokers.

Under the position, issued by the agency's Market Participants Division, the CFTC said it would not recommend enforcement against qualifying providers or their personnel for failing to register as introducing brokers or associated persons when facilitating trading with registered firms and exchanges. To qualify, providers must meet conditions that limit their role in transactions, including restrictions on exercising discretion over users' orders.

The action builds on a similar letter the CFTC issued in March to Phantom Technologies covering its self-custodial crypto wallet software, which was permitted, subject to certain conditions, to provide and market software connecting users with registered futures brokers and exchanges without registering as an introducing broker. In July, Phantom and the Hyperliquid Policy Center jointly asked the agency to extend that protection more broadly to non-custodial wallet providers and to clarify how existing rules apply to blockchain developers and regulated derivatives firms using onchain infrastructure.

The move came two days after the CLARITY Act failed to advance in the Senate, where a cloture motion received 49 votes, short of the 60 needed to proceed to debate. Following the vote, CFTC Chair Michael Selig and Securities and Exchange Commission Chair Paul Atkins signaled on Wednesday that their agencies would push ahead on crypto regulation under existing authority. "The CFTC is locked in and ready to ship its rules for the new frontier of finance," Selig said in a post on X, while Atkins said the SEC would act "with or without legislation" to provide regulatory certainty for digital assets.

On Thursday, the agencies began following through. Alongside the CFTC's no-action position, 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, marking the latest step in the agencies' post-CLARITY push to define rules for digital asset trading venues.