CFTC Relaxes Rules for Passive Software Providers Connecting Users to Regulated Derivatives Firms

The US Commodity Futures Trading Commission (CFTC) has issued a no-action position to expand regulatory relief for 'passive software' providers. These are entities that connect users to CFTC-registered derivatives firms and exchanges without taking on the role of regulated intermediaries.

According to the no-action letter, qualifying providers or their personnel will not be recommended for enforcement against failing to register as introducing brokers or associated persons if they meet specific conditions. This includes limiting discretion over user orders.

The move is expected to lower compliance friction for crypto wallets and other applications that want to link users to regulated venues, including derivatives such as perpetual contracts and prediction markets.

This decision comes after the CLARITY Act failed to advance in the US Senate, with both CFTC Chair Michael Selig and Securities and Exchange Commission Chair Paul Atkins indicating their agencies would proceed under existing regulatory authority.