CFTC Extends No-Action Relief to Software Providers Facilitating Derivatives Trading

On September 17, 2026, the Commodity Futures Trading Commission’s (CFTC) Market Participants Division (MPD) issued CFTC Staff Letter 26-25, extending no-action relief from introducing broker (IB) and associated person (AP) registration requirements to a broad class of “Passive Software Providers” (PSPs) that facilitate access to CFTC-regulated derivatives markets through software interfaces. The letter effectively generalizes the relief previously granted only to Phantom Technologies under CFTC Staff Letter 26-09, making similar relief available to other software providers under substantially the same terms and conditions. Rather than requiring providers to seek individualized relief, the CFTC has now established a framework under which eligible software developers may facilitate access to event contracts and other CFTC-regulated derivatives without registering as an IB, provided specified safeguards are satisfied. To rely on this relief, a PSP must first file with MPD (1) a notice agreeing to satisfy the letter's conditions and consenting to CFTC jurisdiction and (2) written undertakings with each participating registrant.

From Company-Specific Relief to Industry-Wide Relief

This letter can be viewed as a follow-up to the CFTC’s March 2026 issuance of Staff Letter 26-09 to Phantom Technologies. In that letter, Phantom sought relief from IB and AP registration requirements in connection with software that allowed users of its self-custodial crypto wallet to access and trade CFTC-regulated derivatives through registered intermediaries and designated contract markets (DCMs).

Although Phantom’s activities resembled those traditionally associated with introducing brokers, the CFTC concluded that no-action relief was appropriate because Phantom’s role was limited to providing passive software that enabled users to communicate directly with registered market participants. In that capacity, Phantom would not hold customer assets, exercise trading discretion, generate buy or sell recommendations, or participate in order execution.

Following issuance of Letter 26-09, MPD received inquiries from other similarly situated software developers seeking comparable relief. Letter 26-25 directly addresses those requests by extending substantially similar no-action treatment to qualifying PSPs rather than requiring individual applications. The CFTC expressly acknowledged that the relief is not limited to crypto-asset software providers and may apply more broadly to software developers facilitating access to regulated derivatives markets.

Similarly to its handling of the Phantom relief, MPD appears to intend this no-action letter as a bridge to future CFTC rulemaking, stating that its position only applies until “the effective date of a Commission rulemaking or guidance addressing the application of the IB registration requirement to software developers.” This echoes the prior no-action letter as well as CFTC Chairman Michael Selig’s past directive to staff.

What Changed from Phantom?

Compared with the Phantom-specific relief provided in March 2026, this letter:

• Expands availability of relief beyond crypto-asset software providers.
• Applies to standalone software products as well as software embedded within wallet applications.
• Allows MPD to waive statutory disqualification in appropriate circumstances.
• Requires certain PSPs affiliated with a state or tribal government to waive sovereign immunity.

What Activities Are Covered?

In this letter, MPD articulates “Covered Activities” that PSPs may engage in without triggering a CFTC enforcement action for failing to register as an IB or register personnel as an AP, including:

• Providing a trading interface. The PSP can offer “front-end interface software” such as an app, website, or browser extension, or an embedded wallet feature that lets users view market data, review their positions, browse available derivatives products, and place trades in CFTC-regulated products such as event contracts and perpetual contracts. The PSP only facilitates the connection and does not participate in executing individual orders.
• Partnering with registered market participants and charging fees. The PSP may enter into agreements with DCMs, futures commission merchants (FCMs), or IBs to offer users access to derivatives trading. The PSP may receive revenue-sharing payments from those partners and may also charge users transaction-based fees.
• Promoting the platform and available products. The PSP and its personnel may market the platform, advertise their relationships with registered market participants, and promote the availability of specific derivatives products.
• Referring users to specific firms. The PSP may direct users to particular registered exchanges, FCMs, or IBs and encourage users to trade through them, but users must remain free to access any registrant directly without the PSP’s involvement.
• Offering the interface as a standalone product or wallet feature. If embedded in a wallet, the interface must clearly indicate when a user is engaging in CFTC-regulated derivatives activity as opposed to non-regulated wallet activity.

In all of these instances, the user must still be transacting on a DCM either directly as a member or indirectly as a customer of an FCM or IB that is a DCM member, and the assets securing the user’s derivatives positions must remain in custody of the DCM’s derivatives clearing organization (DCO) and/or an FCM that is a member of such DCO.

Notably, the relief remains limited to activity conducted on registered DCMs (either directly or through an FCM or IB). This provides clarity for PSPs operating within the CFTC’s registered market structure, but leaves open questions about DeFi front-end activity and decentralized derivatives.

Conditions Remain Substantial

Although this letter reduces regulatory uncertainty, it does not eliminate compliance obligations. PSPs must satisfy substantially the same ten core conditions previously imposed on Phantom.

• No bad actors. The PSP, its principals, and personnel involved in soliciting users cannot be subject to statutory disqualification and must promptly notify the CFTC if that changes.
• Conflict disclosure. The PSP must inform users about its relationships with exchanges, brokers, or FCMs, including potential conflicts of interest and fees.
• Risk disclosure. Users must receive and acknowledge appropriate risk disclosures from the PSP unless a registered intermediary is already obligated to provide them.
• User access. Users must be onboarded directly with the relevant exchanges, FCM, or IB and must be able to access that firm without going through the PSP.
• Marketing compliance. The PSP must adopt policies and procedures designed to comply with CFTC and National Futures Association (NFA) rules governing communications and marketing as if the PSP were registered as an IB.
• NFA-pre-approval-required advertising. The PSP cannot engage in advertising that would require NFA pre-approval if the PSP were a registered IB.
• Joint and several liability. The PSP and each registered partner must agree in writing to be jointly and severally liable for any violations of the Commodity Exchange Act or CFTC regulations arising from the PSP’s covered activities, consent to CFTC jurisdiction for enforcement, and submit the written agreement to MPD.
• Recordkeeping. The PSP must maintain records relating to its business and compliance with the no-action conditions.
• Insolvency notice. The PSP must promptly notify the CFTC if it becomes insolvent or enters bankruptcy proceedings.
• Submit to CFTC oversight. The PSP must formally agree to comply with the conditions of the no-action letter and consent to the CFTC’s jurisdiction.

Key Takeaways for Software Providers and Market Participants

For PSPs seeking to rely on this relief:

• Make the required filings. Before relying on this relief, file the proper notices and submit written undertakings with each participating registrant to MPD.
• Assess eligibility. Determine whether your activities fall within the Covered Activities described in the letter and whether you can satisfy all applicable conditions.
• Review product functionality. Confirm that your software does not take user assets into custody, generate express buy or sell signals, or exercise discretion over routing or execution of user orders.
• Implement compliance controls. Establish the required disclosures, recordkeeping procedures, marketing controls, and user onboarding processes needed to comply with the relief conditions.
• Evaluate compensation arrangements. Review revenue-sharing, referral, and transaction-fee structures to ensure they fit within the framework contemplated by the letter.

For DCMs, FCMs, and IBs partnering with PSPs:

• Review existing agreements. Ensure contractual arrangements address the letter's joint-and-several liability, disclosure, and cooperation requirements.
• Conduct diligence on PSP partners. Assess whether PSPs have appropriate compliance, supervision, and recordkeeping processes in place.
• Coordinate compliance efforts. The relief is premised on ongoing cooperation between PSPs and registered market participants, not complete separation of responsibilities.

For investors and funds:

• Assess regulatory scalability. Evaluate companies not only on product functionality, but also on their ability to satisfy this letter’s compliance, disclosure, recordkeeping, and contractual requirements.
• Focus on dependency risk. Consider whether a portfolio company’s business model would remain viable if the CFTC ultimately adopted a more formal registration framework.

For all firms operating in this space:

• Treat the relief as a bridge, not a destination. The letter remains effective only until the CFTC adopts rulemaking or guidance addressing software-provider registration requirements. Businesses relying on this relief should evaluate whether their model would remain viable under a more formal or restrictive registration framework and build compliance and operational processes that can adapt to future regulatory developments.

CFTC Letter No. 26-25 (Sept. 17, 2026).

Phantom Technologies Inc., CFTC Letter No. 26-09 (Mar. 17, 2026).

Michael S. Selig, Chairman, CFTC, Remarks at FIA Global Cleared Markets Conference (Mar. 9, 2026), .