CFTC Extends No-Action Relief to Passive Software Developers

The Commodity Futures Trading Commission announced on Thursday that it will not advise regulators to pursue legal action against passive software providers for not registering as introducing brokers. PYMNTS reported that the agency’s Market Participants Division detailed this stance in a press release dated Sept. 17. This guidance builds upon a March staff letter that provided similar protections to Phantom Technologies, the initial provider granted the waiver.

The CFTC stated in the release that, provided certain conditions are met, the division will not suggest the commission act against any such provider or their personnel for failing to register as an introducing broker or an associated person of one. The agency clarified that this exemption covers only the provision and marketing of software that lets users deal with firms holding futures commission merchant licenses, entities acting as brokers for introduction, or exchanges designated for contract trading.

Brandon Millman, CEO and co-founder of Phantom, wrote on X that the new rule offers a route for non-custodial software developers who do not manage user funds or make trading decisions. Ryan VanGrack, vice chair at Coinbase, posted on X that the CFTC’s action complements a Securities and Exchange Commission innovation exemption, characterizing the combined steps as significant regulatory relief.