The CFTC has granted conditional broker-registration relief to passive software providers under a no-action position that sets 10 requirements for developers offering tools connected to regulated derivatives trading.
Summary
- CFTC staff will not recommend enforcement against qualifying passive software providers over certain registration failures.
- The relief applies when software connects users with registered derivatives exchanges, brokers and futures commission merchants.
- Providers must meet 10 conditions, including filing a notice and accepting the CFTC’s enforcement jurisdiction.
- The decision follows separate SEC relief covering eligible tokenized stock trading venues for five years.
CFTC relief covers passive derivatives software
The CFTC’s Market Participants Division said in a Sep. 17 release that it had issued a no-action position for providers of passive software used to facilitate derivatives trading.
Under the position, division staff will not recommend that the Commission take enforcement action against a qualifying provider or its relevant personnel for failing to register as an introducing broker or an associated person of an introducing broker. The protection applies only to activities covered by the letter and remains subject to its stated conditions.
Software providers can qualify when their products allow users to trade with registered futures commission merchants, introducing brokers and designated contract markets. Users must remain customers or direct members of the regulated entity handling their transactions rather than becoming customers of the software provider.
Although the headline refers to crypto developers, the CFTC’s language covers passive software providers involved in regulated derivatives markets. Crypto wallet developers and other digital-asset software companies may fall within the framework when their tools connect users to eligible derivatives products, but the position does not provide blanket protection for every developer or crypto application.
Staff Letter 26-25 makes the position available to qualifying providers after the agency gave similar treatment under Staff Letter 26-09. The earlier letter addressed a request involving software that gave users access to regulated derivatives while leaving trade execution, customer accounts, and asset control with registered firms.
The new position is not a formal exemption from the Commodity Exchange Act. According to the CFTC’s description of its staff-letter process, a no-action letter means the issuing division will not recommend enforcement for failure to comply with a specified legal provision. It does not change the law or bind other divisions in the same manner as a Commission rule.
Ten conditions limit the registration relief
Among the 10 conditions, a provider and the personnel engaged in covered activities cannot be subject to statutory disqualification. Such disqualifications can include certain convictions, regulatory orders, or other legal findings that prevent a person from taking part in registered derivatives businesses.
Customers using the software must have a direct relationship with the registered exchange or intermediary serving them. They must also be able to access the registrant without using the provider’s software, which prevents the developer from becoming the customer’s only route to the regulated firm.
The provider cannot publish advertising or promotional material that would require advance approval from the National Futures Association if the business were registered as an introducing broker. While developers can market their software within the letter’s limits, the condition restricts conduct resembling regulated brokerage promotion.
To use the position, a provider must file a notice with the Market Participants Division and agree to satisfy every condition. The filing must also include consent to the CFTC’s jurisdiction to investigate the provider and pursue enforcement over violations connected to its covered activities.
Relief will remain in place until the effective date of any Commission rule or guidance dealing with how introducing-broker requirements apply to the covered software activity. A future rulemaking could therefore replace the staff position with a permanent framework or impose a different registration test.
The registration question matters because introducing brokers normally solicit or accept orders involving futures, commodity options, swaps, or certain retail commodity transactions without holding customer funds. Passive software can perform parts of that process through code even when its developer never controls assets or executes the transaction itself.
As previously explained by crypto.news in its review of the CFTC registration structure, introducing brokers sit alongside futures commission merchants, designated contract markets, clearing organizations and other regulated participants in the U.S. derivatives system. Each category carries separate registration, conduct and compliance duties.
CFTC action gives U.S. developers a defined route
For developers serving U.S. customers, the position provides a way to offer qualifying tools without immediately taking on the full duties attached to introducing-broker registration. Access remains tied to CFTC-regulated businesses, while developers must stay inside the limits covering customer relationships, marketing and regulatory oversight.
American users do not receive permission to trade products that would otherwise be unavailable to them. The letter concerns the registration status of the software provider, not whether a particular derivative, exchange or customer transaction complies with U.S. law.
The CFTC also retains its enforcement powers outside the narrow registration issue covered by the letter. Fraud, manipulation, unlawful solicitation and breaches of the conditions can still trigger regulatory action, while registered exchanges and intermediaries remain responsible for their own duties under the Commodity Exchange Act.
Regulated crypto derivatives already sit inside the agency’s jurisdiction. Futures, options, and swaps tied to digital commodities must trade through the applicable U.S. regulatory structure, and the CFTC has previously brought cases against offshore platforms accused of offering leveraged crypto products to American customers without registration.
For passive wallet and interface providers, control over customer property and trade decisions can be central to whether their conduct remains within the letter. A developer taking custody, recommending trades, generating explicit buy or sell signals, or acting as the customer-facing intermediary could present facts outside the passive model addressed by the CFTC.
SEC and CFTC use existing powers after CLARITY setback
The CFTC announcement arrived on the same day that the Securities and Exchange Commission issued a separate five-year trading exemption for eligible venues offering tokenized National Market System stocks.
Under the SEC order, approved venues may use permissioned automated market makers and liquidity pools for tokenized stock trading. Covered tokens must provide the same rights and privileges as the traditional shares they represent, while synthetic products that merely track a stock’s price do not qualify.
Eligible venues face limits on supported stock symbols and trading activity. Smart contracts must be public and auditable, and trading in a tokenized share must stop when the primary exchange halts the underlying stock. The SEC also requested public comments as it considers possible changes to the framework.
Both agency actions have followed the Senate’s failure to advance the Digital Asset Market CLARITY Act. Senators rejected cloture on Sep. 15 by 50–49, leaving the motion 10 votes short of the 60 required to begin debate.
The bill sought to divide digital-asset oversight between the SEC and CFTC while establishing registration routes for exchanges and other intermediaries. Seven Senate Democrats who opposed cloture have since reopened negotiations, although no second procedural vote has been scheduled.
Separate from the market-structure bill, the House Ways and Means Committee advanced the Digital Asset Tax Certainty Act in a 38–5 vote on Sep. 16. The proposal addresses staking rewards, digital-asset lending, wash-sale rules, dealer treatment and a proposed exemption for certain network and transaction fees of up to $10.
