The U.S. Commodity Futures Trading Commission (CFTC) has extended its no-action relief to eligible passive software providers, broadening access to derivatives markets. This relief allows providers to serve as front-end interfaces for users connecting with registered futures commission merchants. The implications are significant for market participants looking to leverage software tools without asset custody requirements. Source
The CFTC’s Market Participants Division issued Staff Letter 26-25, which extends the previously granted no-action position to Phantom and other eligible passive software providers, including those outside the crypto sector. This regulatory action allows such software to facilitate access to CFTC-regulated derivatives, which can include event contracts and perpetual contracts. The extension specifies that these software solutions must meet certain conditions, such as not being able to custody user assets or generate explicit buy or sell signals. This regulatory clarity could attract more developers to the derivatives market, influencing overall market dynamics.
As the crypto market currently exhibits mixed signals, regulatory clarity from the CFTC could provide a much-needed boost for derivatives trading. While the 24-hour volume and price data remain absent, the extension of no-action relief is expected to influence participation in the derivatives space positively. Market participants are likely to respond to this development as it opens new avenues for engagement without the regulatory burdens typically associated with asset custody.
The CFTC oversees the U.S. derivatives markets, ensuring transparency and protecting market participants. By extending no-action relief to eligible passive software providers, the CFTC aims to promote innovation while maintaining regulatory oversight of trading activities.
Traders should monitor how this regulatory change impacts the derivatives market, particularly in terms of open interest and funding rates. The extension may lead to increased participation and innovation in derivative contracts, which could create new trading opportunities. However, risks remain around the adaptability of existing market participants to this new framework. The market will likely respond to these developments in the coming weeks, shaping the future of derivatives trading.
This article is for informational purposes only and does not constitute financial advice.
The post CFTC Extends No-Action Relief to Passive Software Providers appeared first on Coinfomania.
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The Commodity Futures Trading Commission (CFTC) has expanded regulatory relief for “passive software” providers that connect users to regulated derivatives firms and exchanges.In a no-action position issued Thursday, the agency’s Market Participants Division said it would not recommend enforcement against qualifying providers or their personnel for failing to register as introducing brokers or associated persons when facilitating trading with CFTC-registered firms and exchanges.The position could make it easier for crypto wallets and other apps to offer access to regulated derivatives, including perpetual contracts and prediction markets, without becoming CFTC-regulated introducing brokers themselves.Source: CFTCTo qualify, providers must meet conditions limiting their role in transactions, including restrictions on exercising discretion over users’ orders.The action extends a similar position granted to Phantom Technologies in March for its self-custodial crypto wallet software. The earlier letter allowed Phantom, subject to certain conditions, to provide and market software connecting users with registered futures brokers and exchanges without registering as an introducing broker.Phantom and the Hyperliquid Policy Center also pushed for broader protections in July, asking the CFTC to shield non-custodial wallet providers from introducing broker requirements and clarify how existing rules apply to blockchain developers and regulated derivatives firms using onchain infrastructure.Related: Bernstein expects ‘aggressive’ rulemaking from SEC, CFTC, following CLARITY Act failureRegulators move quickly after CLARITY Act setbackThe move from the US regulator comes two days after the CLARITY Act failed to advance in the Senate, with a cloture motion receiving 49 votes, short of the 60 needed to proceed to debate.Following the vote, CFTC Chair Michael Selig and Securities and Exchange Commission Chair Paul Atkins signaled Wednesday that their agencies would continue moving forward on crypto regulation under their existing authority.“The CFTC is locked in and ready to ship its rules for the new frontier of finance,” Selig said in a post on X, while Atkins said the SEC would act “with or without legislation” to provide regulatory certainty for digital assets.Source: Paul AtkinsOn Thursday, the agencies began following through. Alongside the CFTC’s no-action position, the SEC approved a temporary exemption allowing qualifying platforms to facilitate limited onchain trading of tokenized US stocks through permissioned automated market makers and liquidity pools.Magazine: Is there any chance left to save the CLARITY Act?
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