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

The 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 the regulatory burden on companies developing 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 guidance applies to firms that satisfy certain requirements, including providing users with sufficient disclosures and establishing internal policies and procedures.

The move expands to the broader industry a no-action position the CFTC had previously granted individually 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 functionality.

Patrick Wilson, chief legal officer at the Solana Policy Institute, said the step is significant because it broadens a regulatory exception once limited to Phantom into a framework other software providers can use. It also makes clearer the standards that let developers connect users to regulated derivatives markets without being classified as brokers. Cody Carbone, 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 Securities and Exchange Commission unveiled an "innovation exemption" policy that would allow on-chain trading of tokenized stocks. The parallel moves suggest the CFTC and SEC are each pursuing administrative changes after the CLARITY Act, a bill designed to establish a federal regulatory framework for digital assets, failed to clear a procedural vote in the Senate.

Still, no-action guidance can be withdrawn if the commission's makeup or policy direction changes, unlike a formal rule. An industry official told The Block that while the broader guidance is a positive step, a future commission could still reverse it. That person added that such a reversal would become harder as more companies begin using the framework. CFTC Chairman Michael Selig said in May that he intended to convert the no-action relief granted to Phantom into a formal rule, but no specific follow-up steps have been announced.