CFTC letter exempts passive crypto apps from broker registration

Decrypt reported that the Commodity Futures Trading Commission issued new guidance for crypto applications on Thursday. The agency’s no-action letter allows passive software providers to bypass registering as introducing brokers.

The guidance permits these providers to link users to regulated derivatives markets, including event and perpetual contracts, as long as they restrict their function to front-end software. The CFTC’s Market Participants Division stated that staff will not recommend enforcement actions against such entities or their personnel for non-registration, provided they meet specific criteria.

“The Division believes that a no-action position for all [passive software providers] on substantially the same terms as that provided to the software developer in Letter 26-09 is warranted,” the letter stated. Required conditions cover user disclosures about relationships with registered entities, marketing policies, recordkeeping, and insolvency notices.

This measure extends the relief previously granted to Phantom Technologies in March. Industry figures reacted positively to the decision. Cody Carbone, CEO of the Digital Chamber, posted on X: “This removes a major regulatory ambiguity that's chilled software innovation in derivatives markets.”

The CFTC announcement coincided with the Securities and Exchange Commission introducing an exemption for tokenized equities. These developments occurred after the Senate failed to advance the Digital Asset Market Clarity Act. CFTC Chair Michael Selig had directed staff in August to examine market-structure regulations in the event that Congress did not enact the bill.