Key Highlights
- CFTC issued a no-action position, signaling no enforcement against Phantom over broker registration.
- The relief covers wallet software that connects users to derivatives trading via registered intermediaries.
U.S. Commodity Futures Trading Commission (CFTC) has issued a no-action position indicating they will not recommend enforcement against Phantom Technologies, the developer of the Phantom Wallet, over broker registration requirements tied to certain activities.
According to the official announcement, the move concerns Phantom’s role in providing software that allows users to access derivatives trading services offered by registered market participants. A no-action position does not change the law but signals that enforcement is unlikely under specified conditions.
Focus on introducing broker requirements
Under U.S. rules, entities that solicit or facilitate derivatives trading typically must register as introducing brokers. CFTC staff said they would not recommend action against Phantom or relevant personnel for failing to register as an introducing broker or as associated persons of such brokers, solely due to the wallet’s software functions.
The relief applies only where users trade through properly registered futures commission merchants, introducing brokers, or designated contract markets.
Mike Selig, Chairman of CFTC, said, “As America cements its position as the crypto capital of the world, clear rules of the road for software developers are critical. Today’s staff no-action letter delivers long overdue clarity for non-custodial digital wallet software providers.”
Software enables access without custody
Phantom develops self-custodial wallet software, meaning users retain control of their digital assets rather than transferring funds to the provider. The company proposed offering and marketing tools that connect users to regulated trading venues, prompting the request for regulatory clarity.
Officials highlighted that the position is limited to software provision and does not extend to activities that would independently trigger registration requirements.
Conditional relief, not formal approval
The no-action position is subject to specific conditions outlined by the CFTC’s Market Participants Division.
Such relief typically depends on representations made by the requesting party and can be withdrawn if circumstances change or conditions are not met. The move also reflects staff guidance rather than a formal rulemaking or Commission vote.
What it means
In a LinkedIn post, Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at Consensys, said the CFTC staff’s framing appears to presume Phantom’s proposed wallet activities would otherwise amount to introducing-broker activity, since the company sought no-action relief for conduct the letter describes as constituting IB activity. He also pointed to the staff’s explanation that Phantom could not rely on earlier technology service vendor guidance, suggesting the agency saw the wallet’s role as going beyond a passive software provider model.
The decision highlights how regulators are grappling with software platforms that facilitate market access without directly handling trades or customer funds.
As self-custodial tools become more integrated with traditional financial markets, questions around broker status and regulatory responsibility are likely to remain a central issue for both developers and policymakers.
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