On September 17, 2026, the Commodity Futures Trading Commission’s Market Participants Division issued Staff Letter No. 26-25, making a version of the no-action position previously granted to Phantom Technologies broadly available to qualifying software providers.

The letter gives non-custodial wallet developers, trading interfaces, and other technology providers a clearer framework for connecting users to regulated derivatives markets without registering as introducing brokers—provided they remain within carefully defined operational boundaries and satisfy ten conditions.

From Company-Specific Relief to an Industry-Wide Position

In March 2026, CFTC staff issued Letter No. 26-09 to Phantom Technologies. That letter addressed software that passively enabled users to trade CFTC-regulated derivatives, including through a self-custodial crypto-asset wallet.

The relief was significant but limited: under CFTC rules, only Phantom could rely on it. Other developers offering substantially similar technology remained exposed to uncertainty over whether their activities could require registration as an introducing broker, or require certain personnel to register as associated persons.

After receiving inquiries from similarly situated providers and their counsel, the Market Participants Division issued Letter 26-25. The new letter extends substantially similar relief to any provider that qualifies as a “Passive Software Provider” and complies with its conditions.

The CFTC’s announcement explains that staff will not recommend enforcement against qualifying providers or their relevant personnel for failing to register as introducing brokers or associated persons solely because they provide and market covered software.

What Activities Are Covered?

The framework applies to front-end software that enables users to:

• Review market data and aggregated position information;

• View information about derivatives products;

• Submit orders directly to registered market participants;

• Access event contracts, perpetual contracts, and other CFTC-regulated derivatives;

• Connect with designated contract markets, futures commission merchants, or introducing brokers; and

• Use the interface as a standalone product or as a feature embedded within wallet software.

The provider may market its software, promote the availability of particular derivatives contracts, and introduce or solicit users to engage with specific registered entities.

Importantly, transaction-based compensation is not automatically disqualifying. A provider may receive a share of revenue from a registered entity or charge users a transaction-based fee, subject to the letter’s conditions.

These permissions distinguish the new framework from older CFTC staff interpretations that imposed more restrictive limitations on technology service vendors, including restrictions on recommendations, referrals, and transaction-related compensation.

The Boundary Between Software and Intermediation

Letter 26-25 establishes three especially important limits. A Passive Software Provider may not:

1. Hold, control, or take custody of user assets;

2. Generate express “buy” or “sell” signals; or

3. Exercise discretion over the routing or execution of user orders.

The provider’s involvement must remain limited to supplying software on the user’s device that transmits the user’s instructions directly to a registered entity. It cannot affirmatively participate in individual orders.

This creates a practical control-based framework. Custody, trading signals, and discretionary execution are the features most likely to move a product beyond passive software and toward regulated financial intermediation.

The distinction is especially relevant to wallet developers, DeFi interfaces, embedded trading applications, and other products seeking to provide access to futures, perpetual contracts, or prediction markets.

“Non-Custodial” Software Within a Custodial Market Structure

Although the software provider cannot custody user assets, Letter 26-25 does not authorize a completely non-custodial derivatives market.

Users must transact on a designated contract market, either directly as members or indirectly through a registered futures commission merchant or introducing broker. Funds or other property securing the derivatives positions must remain in the custody of a derivatives clearing organization or an eligible futures commission merchant.

In other words, the software layer may be non-custodial, but the underlying derivatives activity remains connected to the existing regulated and custodial market structure.

Users must also be onboarded directly with the relevant registered entity and retain the ability to access that entity independently of the software provider.

The Ten Conditions Providers Must Satisfy

Relief is not automatic. A provider seeking to rely on Letter 26-25 must comply with ten conditions, including:

• Ensuring that the provider, its principals, and relevant personnel are not subject to statutory disqualification, absent a waiver;

• Disclosing the provider’s relationships with registered entities and any associated conflicts of interest, including fees;

• Providing applicable risk disclosures and retaining evidence of the user’s acknowledgment;

• Ensuring users are onboarded directly with the relevant registered entity;

• Maintaining policies governing advertising, promotional material, and communications with the public;

• Avoiding promotional activity that would require advance approval from the National Futures Association if the provider were registered;

• Executing written undertakings with each registered entity establishing joint and several liability for violations connected to covered activities;

• Maintaining records consistent with CFTC recordkeeping requirements;

• Notifying the Division of insolvency or bankruptcy; and

• Filing a notice agreeing to the conditions and consenting to the CFTC’s enforcement jurisdiction.

The written undertaking is particularly significant. Both the provider and the participating registered entity must agree to be jointly and severally liable for violations arising from the provider’s covered activities.

Required notices and undertakings must be submitted to the Market Participants Division at the email address identified in the letter.

Relief Comes With Regulatory Reach

The framework offers a deliberate trade: qualifying providers receive protection from an introducing-broker registration enforcement recommendation, but they must expressly accept the CFTC’s jurisdiction over their covered activities.

That is a meaningful change in posture for a developer that has historically characterized itself solely as a publisher of software. Before relying on the letter, a provider should evaluate not only whether its product is technically non-custodial, but also whether its agreements, marketing practices, personnel, disclosures, recordkeeping, and commercial relationships satisfy the framework as a whole.

The ability to receive transaction-based compensation does not eliminate this analysis. Compensation is permitted only within a structure that preserves direct user control, registered market access, required disclosures, and regulatory accountability.

The Relief Is Useful—but Not Permanent

Letter 26-25 represents the views of the Market Participants Division, not the Commission as a whole. It does not amend the Commodity Exchange Act or create a permanent exemption.

The relief remains available until the effective date of future CFTC rulemaking or guidance addressing the application of introducing-broker registration requirements to software developers. Staff also retains the authority to modify, suspend, restrict, or terminate the position.

Different, changed, or omitted material facts may also make the relief unavailable.

What Builders Should Do Now

Software providers considering reliance on Letter 26-25 should evaluate:

• Whether the product ever holds or controls user assets;

• Whether algorithms, rankings, notifications, or other features could function as express trading signals;

• Whether the provider influences order routing or execution;

• Whether users contract directly with and can independently access the registered entity;

• How transaction fees and revenue-sharing arrangements are disclosed;

• Whether marketing materials comply with the standards applicable to introducing brokers;

• Whether the provider and its registered partners are prepared to accept joint and several liability; and

• Whether the required notices, undertakings, records, and compliance procedures are in place.

Product design alone will not determine eligibility. Governance, documentation, marketing, commercial agreements, and actual operational practices will matter as well.

The Bottom Line

CFTC Staff Letter 26-25 converts Phantom’s company-specific relief into a broadly available framework for passive software providers. It gives developers a more concrete path for connecting users to regulated derivatives markets without registering as introducing brokers while preserving clear limits around custody, trading signals, and discretionary execution.

For wallet providers, DeFi interfaces, and embedded trading applications, the letter is an important step toward regulatory clarity. But it is conditional, fact-dependent, and revocable. Teams seeking to rely on it should treat the framework as a compliance architecture—not as a blanket exemption for non-custodial software.

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This blog post is for informational purposes only and is not legal advice. Please consult with a Launch Legal attorney regarding your specific situation.