The U.S. Commodity Futures Trading Commission (CFTC) issued a no-action letter on September 17 that exempts qualifying passive software providers from broker registration requirements, as long as they meet specific conditions and facilitate trading only with regulated futures intermediaries. This move significantly expands regulatory relief for crypto wallet developers and passive trading platforms, following the Senate's failure to advance comprehensive digital asset legislation earlier in the week.

What Does This CFTC Relief Actually Cover?

The CFTC's Market Participants Division said the new position broadly covers providers of passive software that facilitate user trading without taking custody or control of assets. The relief applies specifically to software that connects users with registered futures commission merchants, introducing brokers, and designated contract markets. Under the no-action position, division staff will not recommend enforcement against qualifying providers for failing to register as introducing brokers, nor will they pursue associated-person registration requirements for relevant personnel.

This represents a meaningful expansion of an earlier relief granted to Phantom Technologies in March 2026. Phantom develops self-custodial crypto asset wallet software, meaning users retain full control of their private keys and assets. The CFTC granted Phantom conditional no-action relief from introducing broker and associated-person registration for those same activities. The September action now makes similar treatment available more broadly to other qualifying passive software providers, though the relief remains subject to conditions set by the division.

How Are Regulators Reshaping Crypto Market Structure Without Congress?

The CFTC's relief letter came on the same day the Securities and Exchange Commission (SEC) issued its own regulatory action for tokenized securities venues. These developments followed a Senate procedural vote on September 15 in which senators voted 49-50 against invoking cloture on the motion to proceed to H.R. 3633, a comprehensive crypto market-structure bill known as the CLARITY Act. The measure needed 60 votes to clear that procedural hurdle, meaning the Senate did not advance the bill at that stage.

With Congress stalled, both agencies signaled they would continue acting within their existing statutory authorities. SEC Chairman Paul Atkins described the SEC's new tokenized securities exemption as temporary while the Commission evaluates further rulemaking. He linked the agency's Innovation Exemption directly to Congress's unsuccessful effort to advance the CLARITY Act. Similarly, CFTC Chair Mike Selig said his agency planned to continue rulemaking under its existing statutory authorities.

What Are the Key Conditions Attached to This Relief?

The CFTC's no-action relief is not unconditional. Providers must satisfy specific conditions outlined in the staff letter to qualify for the exemption. The relief applies only to the software activities identified by the division, meaning providers cannot expand into other regulated activities without risking enforcement. Additionally, the position remains subject to the conditions set by the division, which could be modified or revoked if circumstances change.

The SEC's parallel relief for tokenized securities venues came with similarly detailed operating conditions. Tokenized Securities Venues, or TSVs, can trade tokenized National Market System stocks through permissioned automated market makers and liquidity pools while temporarily exempted from the Exchange Act definition of an exchange. However, the SEC attached several restrictions:

• Trading Limits: Tokenized stocks face limits on symbols and trading volume under the framework.
• Rights Verification: TSVs must verify that tokenized shares provide the same rights as equivalent traditional National Market System stocks.
• Issuer Protections: Issuers can object when an unaffiliated third party tokenizes their securities.
• Smart Contract Requirements: The SEC requires public and auditable smart contracts deployed on public, permissionless distributed ledgers.
• Trading Synchronization: Trading must stop when the underlying stock stops trading on its primary exchange.

"The SEC will continue acting within its existing statutory authority," said SEC Chairman Paul Atkins.

Paul Atkins, Chairman of the Securities and Exchange Commission

How to Understand the Regulatory Landscape for Crypto Software Providers

For crypto wallet developers and passive software providers, the CFTC's relief creates a clearer operational pathway. Here are the key takeaways for understanding how this relief shapes the regulatory environment:

• Passive Software Definition: Software that does not take custody, control, or discretion over user assets qualifies for relief, provided it only facilitates connections to regulated intermediaries.
• Intermediary Requirements: Providers must ensure users trade only with registered futures commission merchants, introducing brokers, or designated contract markets to maintain relief eligibility.
• Conditional Nature: Relief is not permanent and remains subject to CFTC conditions; providers must monitor for any changes to the no-action position or conditions.
• Broader Availability: Unlike earlier relief granted only to Phantom, this September action makes similar treatment available to multiple qualifying providers across the industry.

The CFTC's approach reflects a pragmatic regulatory strategy. Rather than waiting for Congress to pass comprehensive legislation, the agency is using its existing authority to provide relief for specific software categories that pose lower regulatory risk. Passive software that merely facilitates connections between users and regulated intermediaries does not itself engage in broker activities, making it a natural candidate for exemption.

The timing of these actions matters. Both the CFTC and SEC moved forward with relief on the same day Congress failed to advance the CLARITY Act. This suggests that regulators view their existing statutory authorities as sufficient to address market-structure issues in the near term. SEC Chairman Atkins explicitly linked the Innovation Exemption to Congress's unsuccessful effort, signaling that the SEC is willing to use temporary relief mechanisms to support innovation while the legislative process remains stalled.

For the broader crypto industry, these regulatory moves indicate that relief will likely continue to come through agency action rather than comprehensive legislation. Wallet developers, exchange operators, and other software providers should monitor CFTC and SEC guidance closely, as both agencies have signaled they will continue issuing no-action letters and exemptions under their existing authorities. The conditions attached to each relief grant remain specific and narrow, meaning providers must carefully document their compliance with the stated requirements to maintain protection from enforcement.