CFTC extends no-action relief on broker registration to all passive trading software providers

The CFTC's Market Participants Division issued a no-action letter Thursday saying it will not recommend enforcement against qualifying 'passive software' providers, or their personnel, for failing to register as introducing brokers or associated persons when connecting users to CFTC-registered derivatives firms and exchanges, according to Cointelegraph, Decrypt, Unchained and Bankless. The relief extends a bespoke position the CFTC gave Phantom Technologies in March (Letter 26-09) for its self-custodial wallet to other similarly situated providers, per Unchained and Bankless. Unchained identifies the new document as Staff Letter 26-25 and reports the division said it acted after hearing from 'other similarly situated providers of passive software' seeking the same treatment. Covered software can let users view market data and positions and submit orders directly to registered exchanges, futures commission merchants or introducing brokers for products including event contracts and perpetual contracts, per Decrypt and Unchained. To qualify, providers must limit their role in transactions, including not exercising discretion over users' orders, per Cointelegraph, though Unchained notes providers may still take a revenue share, charge per-transaction fees, market specific venues and embed the software in their own wallets provided regulated trading is 'clearly and conspicuously' disclosed. Bankless places the letter alongside an SEC Innovation Exemption for tokenized stocks unveiled the prior day, describing both as parallel moves by US regulators.