CFTC Conditionally Clears Phantom for Broker Registration Amid Regulatory Scrutiny

The U.S. Commodity Futures Trading Commission (CFTC) Market Participants Division (MPD) has issued a conditional no-action position regarding Phantom, a self-custodial wallet provider, concerning its introduction of brokers.

On March 17, the CFTC stated that it will not recommend enforcement action against Phantom for providing software that connects users with registered futures commission merchants (FCMs), introducing brokers (IBs), and designated contract markets (DCMs), provided certain conditions are met. The CFTC clarified that Phantom's role is limited to offering passive software that helps users directly send orders to registered counterparties via mobile devices or browser extensions.

Phantom will not be subject to enforcement if it does not hold or control user assets, issue buy/sell signals, or independently determine order execution and routing. The no-action position applies until relevant regulations or guidelines are implemented. Ten conditions have been imposed on Phantom, including conflict of interest disclosures, risk warnings, ensuring users' independent access to trading counterparties, compliance with CFTC and National Futures Association (NFA) marketing rules, and maintaining business records.