CFTC Issues Conditional No-Action Letter for Passive Trading Software

The U.S. Commodity Futures Trading Commission (CFTC) has issued a conditional no-action letter for passive trading software providers, stating that they cannot handle user assets or exercise discretion in order routing. The CFTC announced on July 17 that it would not pursue enforcement actions against software providers who meet certain requirements under No-Action Letter 26-25, provided they do not fail to register as introducing brokers.

ABMedia reported that this move does not signal a broader relaxation of virtual asset regulations but rather a conditional allowance aligned with existing derivative trading structures. The CFTC explicitly stated that providers must not hold, control, or custody user assets or generate explicit buy/sell signals. They also cannot exercise discretion in order routing or execution, and must sign written agreements with registered exchanges assuming joint liability for legal violations.

This no-action letter is not a binding rule of the CFTC but reflects the stance of its Market Participants Division. It may be superseded by future regulations or guidelines.