The CFTC has granted conditional broker-registration relief to passive software providers, issuing a no-action position that sets ten requirements for developers offering tools connected to regulated derivatives trading.
The Market Participants Division said in a Sept. 17 release that it issued the position for providers of passive software used to facilitate derivatives trading. Under the letter, division staff will not recommend that the Commission take enforcement action against a qualifying provider or its relevant personnel for failing to register as an introducing broker or an associated person of an introducing broker — provided the provider stays within the letter’s stated conditions.
The decision lands one day after news of a separate SEC relief covering eligible tokenized stock trading venues for five years, extending a pattern of U.S. regulators carving defined safe harbors out of legacy registration regimes rather than rewriting the rules themselves.
What the relief actually covers
Software providers can qualify when their products allow users to trade with registered futures commission merchants, introducing brokers and designated contract markets. Users must remain customers or direct members of the regulated entity handling their transactions, rather than becoming customers of the software provider.
Although headlines framed the move as relief for crypto developers, the CFTC’s language covers passive software providers involved in regulated derivatives markets broadly. Crypto wallet developers and other digital-asset software companies may fall within the framework when their tools connect users to eligible derivatives products — but the position does not provide blanket protection for every developer or crypto application.
Staff Letter 26-25 makes the position available to qualifying providers after the agency gave similar treatment under Staff Letter 26-09, which addressed a request involving software that gave users access to regulated derivatives while leaving trade execution, customer accounts and asset control with registered firms.
Importantly, a no-action letter is not a formal exemption from the Commodity Exchange Act. It means the issuing division will not recommend enforcement for failure to comply with a specified legal provision. It does not change the law, and it does not bind other divisions in the manner of a Commission rule.
Ten conditions define the perimeter
Among the ten conditions, a provider and its relevant personnel cannot be subject to statutory disqualification — a category that includes certain convictions, regulatory orders and other legal findings that prevent participation in registered derivatives businesses.
Customers using the software must have a direct relationship with the registered exchange or intermediary serving them. They must also be able to access that registrant without using the provider’s software, which prevents the developer from becoming the customer’s only route to the regulated firm.
The provider cannot publish advertising or promotional material that would require advance approval from the National Futures Association if the business were registered as an introducing broker. Developers can still market their software within the letter’s limits, but the condition restricts conduct resembling regulated brokerage promotion.
To use the position, a provider must file a notice with the Market Participants Division and agree to satisfy every condition. The filing must include consent to the CFTC’s jurisdiction to investigate the provider and pursue enforcement over violations connected to its covered activities.
The relief remains in place until the effective date of any Commission rule or guidance addressing how introducing-broker requirements apply to the covered software activity. A future rulemaking could replace the staff position with a permanent framework — or impose a different registration test entirely.
Why registration status matters here
Introducing brokers normally solicit or accept orders involving futures, commodity options, swaps or certain retail commodity transactions without holding customer funds. Passive software can perform parts of that process through code even when its developer never controls assets or executes transactions directly — the ambiguity that made the no-action request necessary in the first place.
For developers serving U.S. customers, the position provides a defined route to offer qualifying tools without immediately taking on the full compliance duties attached to introducing-broker registration. Access remains tied to CFTC-regulated businesses, and developers must stay inside the limits covering customer relationships, marketing and regulatory oversight.
The letter has clear boundaries. American users do not receive permission to trade products that would otherwise be unavailable to them — the position concerns the registration status of the software provider, not whether a particular derivative, exchange or customer transaction complies with U.S. law. And the CFTC retains its enforcement powers outside the narrow registration issue: fraud, manipulation, unlawful solicitation and breaches of the conditions can still trigger action, while registered exchanges and intermediaries remain responsible for their own obligations.
For the crypto industry, the move continues a practical trend: regulators defining developer safe harbors condition by condition, rather than leaving software builders to guess whether code alone makes them a broker.
Market snapshot at press time (Sept. 17, 12:00 UTC): Bitcoin traded near 76,323 USD, Ethereum near 2,436 USD, and Solana near 100 USD, according to CoinGecko data.
real question is who audits compliance with the ten conditions. the letter assumes providers self police until something breaks, then we find out what passive meant
self policing until an enforcement case forces the audit question, that is the whole no-action model. it mostly held for swap dealers, mostly
swap dealer no-actions mostly held because the audits never came. crypto devs keep worse records than swap desks ever did, this is gonna get ugly the first time staff asks for logs
ten conditions on that no-action letter and users still have to stay customers of the regulated entity. its relief with a leash on it
^ exactly, read the condition list. you basically cant touch customer funds at all. passive means passive
CFTC relief landing one day after the SEC letter. Someone in Washington finally coordinated, color me surprised.
devs building trading tools just got their homework assignment. ten rules and half of them are just dont be a broker lol
Ten conditions, and the load bearing one is that users must stay customers of the registered FCM rather than of the software provider. That single line does most of the legal work here.
the FCM customer condition is the entire letter. everything else is paperwork around that one sentence
And it costs the CFTC almost nothing. All the oversight flows through the FCMs and designated contract markets that already report to them.
SEC relief for tokenized stock venues one day, CFTC no-action letter the next. Regulators have clearly stopped waiting for Congress and are issuing safe harbors piecemeal.
safe harbor letters get revised or pulled with each new chair though. one no-action position is thin protection, a statute is the durable version
Piecemeal is generous. This is staff improvising because market structure bills keep dying in the Senate and someone has to keep the lights on.
Ten conditions and half of them just restate what the FCM already handles onboarding wise. Cheap relief for the CFTC to give, but actual clarity for the devs, ill take it
Passive software providers is doing a lot of lifting in that letter. The moment your tool starts giving advice or touching custody, you are outside the no-action zone and back to registering.
the advice firewall is already standard practice tho. tradingview has published trade ideas for a decade and never had to register as an IB
the moment your bot DMs users trade ideas you are a person of the firm lol. the line between tool and advice is the whole ballgame
the advice line is where the SEC analog cases keep landing too. passive tool vs person of the firm, same fight different regulator
same fight, same loophole too. devs will firewall the advice features into a separate educational bot and keep the execution tool clean lol
the educational bot firewall trick is as old as payment for order flow. works right up until the enforcement letter quotes the dm
the custody line is where most shops will trip. dashboards and signal screens stay inside the letter, the second a tool touches keys or order routing you are back to registering as an IB
the advice firewall is basically the same line the SEC drew for robo advisors years ago. execute only and you are a tool, recommend and you become a person of the firm