US regulators are taking a step toward the fintech industry. The Market Participants Division (MPD) of the US Commodity Futures Trading Commission (CFTC) has published new staff guidance that significantly simplifies life for trading software developers. Developers of “passive” software are now exempt from the complex and costly requirement to register as an Introducing Broker.
This decision could fundamentally change the landscape of trading terminals, crypto wallets, and analytical platforms, opening a path for them to legally monetize without the risk of facing strict enforcement actions from the regulator.
An Interface Is Not a Broker: The Essence of the New Relief
For a long time, the line between a simple software interface and brokerage activity in the US remained blurred. Any application that allowed users to execute transactions with derivatives risked being deemed an unregistered broker.
The MPD’s new clarifications bring long-awaited clarity. If software functions merely as a connecting link—a “passive” terminal—the agency will not recommend enforcement action against its creators for failing to register as an introducing broker.
Under the scope of this relief are interfaces working with:
- Event contracts (prediction markets);
- Perpetual futures;
- Other regulated derivatives.
Importantly, the relief has a broad scope: it applies not only to crypto services, but also to platforms working with traditional financial instruments. The software can exist as a standalone product or be integrated into other applications (such as non-custodial crypto wallets). The main requirement during integration is strict visual and technical separation of regulated derivatives operations from the rest of the application’s functionality.
Freedom of Action and New Monetization Options
In addition to removing the registration burden, the regulator has greenlit several previously controversial practices:
- Informational functionality: Applications can freely display market data, user balances and positions, and showcase available investment products.
- Order transmission: Software can serve as a gateway for submitting trading orders, provided they are routed exclusively to legal, registered market participants (exchanges and brokers).
- Advertising and revenue: Perhaps the most crucial innovation for businesses—developers are officially permitted to advertise their services and the derivatives offered through them. Furthermore, they can legally collect transaction fees or share revenue (revenue share) with partner brokers.
Red Lines: Where Software Ends
Exemption from registration does not mean an absence of oversight. The regulator established strict boundaries; crossing them forfeits CFTC protection immediately. To be considered “passive,” an application must not:
- Hold assets: Any form of custodial storage or direct control over user funds and keys is strictly prohibited.
- Provide advice: Generating trading buy or sell signals is banned. Software must not act as an investment advisor or robo-advisor.
- Manage orders: Developers cannot independently route orders or determine how they are executed.
- Bypass brokers: The user must legally and technically remain a direct client of a licensed broker or exchange, retaining the ability to trade with them directly without the intermediary app.
Additionally, developers bear a substantial compliance burden. They must publicly disclose fees and potential conflicts of interest, issue risk warnings, maintain detailed activity records (logs), submit to CFTC jurisdiction, and adhere to strict advertising standards set by the National Futures Association (NFA).
The Phantom Precedent and Political Context
The catalyst for implementing these new rules en masse was a precedent set in March. At that time, CFTC’s MPD granted no-action relief on an individual basis to the developers of the popular Phantom crypto wallet. This decision opened Pandora’s box: lawyers for other fintech projects flooded the regulator with demands for equal operating conditions.
The current MPD measures aim to standardize this process. However, the agency emphasizes that this letter reflects only the staff’s opinion. It is not legally binding on the Commission itself, is temporary, and can be revoked at any time—until the CFTC issues a formal set of final rules.
The new relief comes against a backdrop of intense political battles in Washington. The letter was published just two days after the US Senate failed to pass the CLARITY Act, which was meant to bring regulatory clarity to digital assets.
Following the bill’s failure, CFTC Chairman Michael Selig and SEC Chairman Paul Atkins issued a joint statement affirming that financial regulators would not wait for lawmakers and would continue establishing rules for the crypto market independently.
The regulators’ actions back up these words: simultaneously with the CFTC letter, on September 17, the Securities and Exchange Commission (SEC) approved a five-year exemption for platforms facilitating on-chain trading of tokenized stocks. Earlier in June, regulators also launched a comprehensive review of crypto derivative definitions.
All of this suggests that US authorities are shifting tactics: moving away from “regulation by enforcement” toward the targeted integration of decentralized technologies into the legal framework of traditional finance.
