CFTC Gives Software Developers Green Light on Regulated Derivatives Trading

The Commodity Futures Trading Commission (CFTC) has announced that software developers can create regulated derivatives trading within self-custodial crypto wallets without registering as brokers. This relief, outlined in Staff Letter 26-25, extends to any developer that meets the CFTC's conditions.

The CFTC's Market Participants Division issued a letter stating it will not recommend enforcement against providers of 'passive software' for failing to register as introducing brokers or their personnel for failing to register as associated persons. This relief is similar to one granted in March to Phantom Technologies, the company behind the Phantom crypto wallet.

The conditions outlined in the letter require providers to distribute front-end software that allows users to send orders directly to a registered exchange, futures commission merchant, or introducing broker. The covered products include event contracts, perpetual contracts, and other Commission-regulated derivatives.