The Commodity Futures Trading Commission said on Thursday that so-called passive software providers connecting users to regulated crypto and prediction market platforms will not face enforcement action for failing to register as brokers, so long as they never take custody of a user’s assets or make trading decisions on their behalf. The staff guidance turns what had been a one-off exemption into a standing rule available to any qualifying provider.
The relief traces back to March, when the crypto wallet Phantom became the first passive software provider to win no-action relief from the CFTC on a case-by-case basis. Thursday’s guidance generalises that arrangement, meaning wallets, websites and other platforms that route users to CFTC-regulated products no longer need their own individual determination from the agency before operating that way.
The conditions are narrow by design. Eligible providers must act as neutral routing mechanisms only, with no active management, no advice and no order execution carried out on a user’s behalf, and they cannot hold custody of what users trade. Industry figures see the move as clearing a practical bottleneck that had left every new wallet or app wanting to plug into CFTC-regulated crypto derivatives or prediction markets waiting on its own bespoke ruling.
What the guidance does not resolve is where passivity actually ends. A wallet that merely routes an order looks nothing like one that nudges a user toward a particular market or bundles trades into a suggested basket, and the CFTC has not spelled out which side of that line the growing crop of AI-assisted trading interfaces will fall on. That determination, unlike this one, will likely come case by case.
