The US Commodity Futures Trading Commission (CFTC) granted an exemption on Thursday to software companies building crypto trading tools. Under certain conditions, developers won't face enforcement action for not registering as introducing brokers.
An extension of the Phantom decision
This follows the "no-action" letter the CFTC gave crypto wallet provider Phantom in March. Phantom was trying to add derivatives trading functionality to its software at the time. Thursday's decision took that same protection out of Phantom-only territory and opened it up to any developer whose software connects users to regulated derivatives markets. Developers who want to make use of it need to provide certain disclosures and put internal policies and procedures in place.
A footnote in the announcement suggests the exemption might not stay limited to "crypto asset-related software." The scope could widen down the line.
Solana Policy Institute General Counsel Patrick Wilson said the protection that used to apply only to Phantom has now become a framework other software providers can use too. Developers, he noted, now have more clarity on how to connect users to regulated derivatives markets without triggering introducing-broker status.
Digital Chamber CEO Cody Carbone also welcomed the decision on X. In his view, it removes the ambiguity that had been discouraging software development in derivatives markets.
SEC made a move the same day
The decision came just hours after the SEC announced its "innovation exemption," which will pave the way for onchain trading of tokenized stocks. After the Senate fell short on a preliminary vote for the Clarity Act last week, both the SEC and CFTC said they'd move forward with their own agendas. The Clarity Act would have been the first law to comprehensively regulate the digital asset industry at the federal level.
The industry wanted that bill because it offered a permanence regulators can't provide on their own.
The permanence concern remains
A source in the crypto industry pointed out that no-action letters can be reversed by a future administration. According to the source, the expansion is good news, but the risk is still on the table. As more people adopt this framework, the source believes, the harder it becomes to walk it back.
CFTC Chair Michael Selig floated the idea of turning the Phantom letter into a formal rule back in May, but that hasn't happened yet.
