CFTC passive software relief now extends conditional introducing-broker registration relief beyond Phantom to eligible software providers. Staff Letter 26-25 covers interfaces connecting users directly to registered derivatives firms or exchanges. It includes event contracts, but leaves custody and order control outside the provider's role. Traders should verify the underlying venue and access terms before funding an account.
By Ulysses Cornelius. Sources checked September 17, 2026, at 4:16 p.m. ET. Educational market analysis, not financial or legal advice. No live contract odds or price reaction are asserted here.
TL;DR
- The CFTC's Market Participants Division broadened its conditional no-action position on September 17.
- Eligible software can connect users to regulated derivatives, including event contracts and perpetual contracts.
- Users must retain independent access to the registered firm or exchange. The software provider cannot take custody of their assets.
- A new interface can add fees. Registration relief alone says nothing about execution quality.
What happened: CFTC passive software relief expands
The CFTC announcement extends a position similar to the relief granted to Phantom Technologies in March. The new Staff Letter 26-25 makes conditional relief available to other passive software providers, including firms outside crypto.
An introducing broker solicits or accepts derivatives orders without taking the customer's trading funds. An associated person is an individual performing relevant solicitation or supervisory work for that broker. Those registration categories matter because a software business can cross into regulated activity when it brings customers to a trading firm.
The division says it will not recommend enforcement for failure to hold those registrations solely for the covered activities, provided the conditions are met. This is a staff no-action position. It is not binding on the Commission and is not a blanket exemption from commodities law.
The stated duration runs until the effective date of Commission rules or guidance addressing software developers' introducing-broker registration obligations. Staff also retains authority to modify or withdraw the position.
Why the announcement matters for markets
Cointelegraph's independent reporting identifies a possible distribution benefit: wallets and other apps could connect users to regulated derivatives without becoming introducing brokers themselves. Actual availability still requires an eligible arrangement with a registered firm or exchange.
The letter expressly includes event contracts and perpetual contracts. An event contract settles according to a specified outcome. A perpetual contract generally has no fixed expiry. Putting both in one app does not make their settlement or funding mechanics interchangeable.
No market-price move is attributed to this letter in the reviewed evidence. The immediate change concerns the conditions for software distribution. Any new listing would require separate confirmation. Claims of deeper liquidity or lower costs also need evidence.
Implications for prediction-market and crypto traders
Prediction-market participants should identify the designated contract market, meaning the CFTC-regulated exchange, behind an interface. The contract's own resolution rules still govern its outcome. A distribution announcement does not settle the separate jurisdictional disputes discussed in our Kalshi tribal lands ruling analysis.
Crypto derivatives traders should distinguish a wallet's interface from custody of a derivatives position. The letter describes funds held with the exchange's derivatives clearing organization, a clearinghouse, and/or a futures commission merchant, a broker that can hold customer trading funds, that is a member of that clearinghouse. The passive software provider must not hold or control user assets.
It also cannot generate express buy or sell signals or exercise discretion over order routing or execution. A service advertising managed decisions therefore raises a different question from software that simply lets a user transmit an order.
A four-check access worksheet
Before using an announced integration, record the evidence below. This is an original trader due-diligence exercise, not a legal opinion or a complete compliance audit. An unanswered check means more verification is needed.
| Check | Evidence to save | Decision checkpoint |
|---|---|---|
| Trading relationship | Named exchange or broker and the customer's account agreement. | Confirm the user is a direct member or customer of the relevant registered entity. |
| Independent access | Documented direct login or access procedure outside the software provider. | Verify the procedure before relying on the app as the only route to positions. |
| Custody and control | Account terms identifying the custodian and who submits each order. | Investigate any claim that the passive provider holds assets or decides execution. |
| Costs and conflicts | Provider disclosures plus the complete pre-trade cost estimate. | Compare identical contracts and order sizes across the app and direct route. |
The letter requires more than these customer-facing checks. Its ten conditions include conflict disclosures and risk disclosures, subject to a stated exception. Providers and their registered counterparties must execute and file joint-and-several-liability undertakings, accepting shared responsibility for covered violations. Providers also have recordkeeping obligations and must file a notice agreeing to the conditions.
A hypothetical cost comparison
Assume a binary contract pays $1 if Yes wins and zero otherwise. Buying 100 contracts at $0.60 costs $60. Suppose the direct route adds $1 in total entry costs, while the app adds $3 for the same fill. Total outlays are $61 and $63.
With settlement as the exit and no other charges, break-even probability equals total outlay divided by the $100 winning payout. The thresholds are 61% and 63%. These are invented teaching inputs, not fees from a named provider. The example shows why easier access need not improve trade economics. Our prediction-market fees guide explains the calculation further.
Potential positives vs negatives
Eligible developers gain a clearer route to offer interfaces beyond the original Phantom-specific relief. The independent-access condition could also help users avoid depending entirely on one app for their trading relationship.
More interfaces can make responsibility harder to understand. Revenue-sharing arrangements and direct transaction fees are permitted within the covered activities, so users should read the conflict disclosures. Conditional relief can also change, and it does not certify any provider's security.
What could happen from here
Base scenario: gradual integrations
Providers announce limited connections to registered venues. Named counterparties and documented direct access would support this scenario. Announcements without usable account arrangements would weaken it.
Upside scenario: useful competition
Competing interfaces improve usability without increasing total costs. Comparable executable quotes and complete fee disclosures would support that outcome. Extra charges that erase any convenience benefit would invalidate the cost-improvement claim.
Downside scenario: confusing implementation
Users mistake a no-action letter for approval of every product in an app. Missing custody explanations or blocked independent access would warrant further investigation. Clear documentation and functioning direct access would reduce those concerns.
What traders should watch next
- Provider announcements identifying the registered counterparty and available contracts.
- Disclosure changes covering referral compensation and direct user fees.
- Commission rulemaking or guidance that could replace the staff position.
- Evidence that users can access their registered counterparty independently.
FAQ
Does the CFTC approve every app relying on this letter?
No. The letter is a conditional staff position on specified registration obligations. It does not certify an app or approve every advertised contract.
Does this authorize self-custody of derivatives collateral?
The covered model keeps collateral with the relevant clearing organization and/or its futures commission merchant member. The passive software provider cannot hold or control user assets.
Sources
Primary documents: CFTC September 17 announcement, Staff Letter 26-25, and the March Phantom announcement. Independent context: Cointelegraph's report linked above.
Feature photo: CFTC headquarters at Lafayette Center, Washington, D.C., by Dclemens1971 via Wikimedia Commons, CC BY 4.0. Original photograph, unmodified.
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