The Commodity Futures Trading Commission (CFTC) has granted conditional broker-registration relief to qualifying passive software providers that connect users with regulated derivatives markets. The agency’s Market Participants Division announced the no-action position on September 17, stating it will not recommend enforcement against eligible providers or their personnel for failing to register as introducing brokers or associated persons, provided they meet specific criteria.
Staff Letter 26-25: Requirements and Scope
The relief is outlined in Staff Letter 26-25, which imposes 10 requirements that providers must satisfy to qualify. The no-action position is narrow: it only covers enforcement recommendations related to introducing-broker and associated-person registration. It does not exempt providers from other obligations under the Commodity Exchange Act or CFTC regulations. Providers cannot rely on the letter for activities beyond those explicitly covered.
The framework applies to software that enables users to trade through registered futures commission merchants (FCMs), introducing brokers, and designated contract markets (DCMs). Users must remain customers or direct members of the regulated firm handling their transactions, not of the software provider. This distinction places the software provider outside traditional intermediary functions, as the CFTC emphasized that the relief targets passive tools—not businesses that take custody, execute trades, or control customer accounts.
Crypto Developers Not Automatically Covered
The CFTC clarified that crypto developers do not receive blanket protection. Wallet developers and other digital-asset software companies may qualify when their products connect users with eligible derivatives markets, but eligibility depends on meeting the letter’s requirements and the nature of their services.
Extension of Earlier Relief
Staff Letter 26-25 follows a similar no-action position under Staff Letter 26-09, which covered software providing user access to regulated derivatives while registered firms retained responsibility for trade execution, customer accounts, and asset control. The new letter does not alter the Commodity Exchange Act; like all no-action letters, it states that the division will not recommend enforcement for specified conduct, without creating a formal exemption.
Industry Reaction and Broader Regulatory Context
Industry groups welcomed the move as added regulatory clarity. Digital Chamber CEO Cody Carbone said the action removes uncertainty for software providers building interfaces that connect users with registered FCMs and DCMs. Blockchain Association CEO Summer Mersinger noted that the division took a functional approach by examining what a provider actually does.
The CFTC action arrived on the same day the Securities and Exchange Commission announced an ‘Innovation Exemption’ for tokenized US stocks. Both developments followed the Senate’s failed vote on the Digital Asset Market Clarity Act, which would have created a federal market-structure framework for digital assets. CFTC Chair Michael Selig had directed staff in August to explore crypto market-structure rules if Congress did not pass the legislation. Coinbase Vice Chairman Ryan VanGrack described the SEC and CFTC actions as a sharp change after years of regulatory standstill.
In summary, the CFTC’s no-action position provides conditional protection to qualifying passive software providers meeting Staff Letter 26-25’s requirements. The relief remains limited to covered activities and does not change the Commodity Exchange Act. Crypto developers may qualify only when their tools fit the framework.
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