CFTC Relaxes Rules for Passive Crypto Software
The Commodity Futures Trading Commission (CFTC) has issued new guidance that allows passive crypto software to operate without registering as brokers, provided they do not take possession of customer funds. This carveout hinges on a clear condition: providers must at no point hold users' assets.
Traditionally, companies that solicited or took in trade orders had to register as brokers. However, Phantom Technologies Inc., which partners with Kalshi, received a no-action letter in March that lifted this requirement for its model. CEO Brandon Millman said Phantom helped set the stage for platforms that do not take custody or make trading decisions.
Other companies, including Crypto.com and ProphetX, have also adopted this approach by running platforms registered with the CFTC. Aaron Brogan of Brogan Law noted that this could potentially allow prediction markets to be implemented in various locations, such as designated contract markets.