CFTC Eases Rules for Crypto Software Developers, Allows Market Access Without IB Registration

The US Commodity Futures Trading Commission said it will not require certain software developers to register as introducing brokers if they meet specified conditions. The move reduces regulatory burdens for companies building crypto trading services.

The Block reported on September 17 that the CFTC issued no-action guidance saying software developers do not need to register as introducing brokers, or IBs, even if they connect users to designated contract markets, or DCMs. The policy applies to firms that meet certain conditions, including giving users sufficient disclosures and maintaining internal policies and procedures.

The move expands across the industry a no-action position the CFTC had previously granted only to crypto wallet provider Phantom. In a footnote, the agency said the guidance could also apply to developers beyond crypto software if they offer similar functions.

Patrick Wilson, general counsel at the Solana Policy Institute, told The Block the change is significant because a regulatory exception once limited to Phantom has been broadened into a framework other software providers can use. He added that it gives developers clearer standards for connecting users to regulated derivatives markets without being classified as brokers. Cody Carbon, chief executive officer of the Digital Chamber, wrote on X that a key source of regulatory uncertainty that had held back software innovation in derivatives markets had been removed.

The guidance came just hours after the US Securities and Exchange Commission unveiled an "innovation exemption" policy that would allow on-chain trading of tokenized stocks. The steps suggest the CFTC and SEC are each pursuing administrative changes after the CLARITY Act, which would establish a federal regulatory framework for digital assets, failed to clear a procedural vote in the Senate.

Still, no-action guidance is not a formal rule and could be withdrawn if the commission's composition or policy direction changes. One industry official told The Block that the broader guidance is a positive development, but the risk remains that a future commission could reverse it. The person added that as more companies use the framework, it may become harder to roll back later. CFTC Chairman Michael Selig said in May he intended to turn the no-action position applied to Phantom into a formal rule, but no specific follow-up steps have been announced.