CFTC Eases Regulations for Crypto Developers, Removes Broker Registration Requirement

The U.S. Commodity Futures Trading Commission (CFTC) has decided not to require software developers meeting specific criteria to register as brokers. This move is expected to reduce regulatory burdens for companies developing virtual asset trading services.

According to a report by crypto-focused media The Block on July 17 (local time), the CFTC issued a no-action guidance stating that software developers connecting users to designated contract markets (DCMs) will not be required to register as introducing brokers (IBs). The guidance applies to businesses that adequately disclose relevant information to users and establish internal policies and procedures.

This action expands a previous no-action stance the CFTC granted specifically to Phantom, a virtual asset wallet service. In its footnote, the commission explained that the guidance could also apply to other developers offering similar functionality beyond just virtual asset software.

Patrick Wilson, Chief Legal Officer at Solana Policy Institute, noted that the regulatory exception previously limited to Phantom has been expanded into a framework applicable to other software businesses, making it clearer for developers to connect users to regulated derivatives markets without being classified as brokers. Cody Carbon, CEO of Digital Chamber, also stated on X that the key regulatory uncertainty preventing innovation in derivative markets had been resolved.

The guidance came just hours after the Securities and Exchange Commission (SEC) announced an 'innovation exemption' allowing on-chain trading of tokenized stocks. With the CLARITY Act for federal regulation of digital assets failing to pass a Senate procedural vote, both CFTC and SEC appear to be taking administrative steps to refine their regulatory frameworks.

However, as the no-action guidance is not a formal rule, it could be withdrawn if future commission composition or policy direction changes. An industry insider told The Block that while the expansion of the guidance is positive, there remains a possibility the next commission could reverse it, though increased adoption would make reversal more difficult. CFTC Chairman Michael Saylor previously indicated in May he aims to convert Phantom's no-action stance into a formal rule but has not yet provided specific follow-up measures.