CFTC Relaxes Registration Requirements for "Passive Software," Expanding Access to Crypto and Prediction Markets

PANews, September 18 - According to a U.S. Commodity Futures Trading Commission (CFTC) announcement and Bloomberg reports, the CFTC's Market Participants Division issued a no-action position to "passive software" providers. Under specific conditions, where the software solely assists users in transacting with regulated futures commission merchants, introducing brokers, or designated contract markets, staff will not recommend enforcement action against providers for failing to register as introducing brokers or their associated persons; applicable platforms must not hold user assets or make trading decisions on behalf of users.

This measure expands the case-specific arrangement from March, which targeted crypto wallet Phantom, to eligible software providers. Phantom has partnered with Kalshi to offer prediction market access to its over 20 million wallet users. Industry insiders believe this could make it easier for crypto wallets, websites, and other online platforms to connect to regulated prediction markets and other CFTC-regulated products. The guidance will remain in effect until relevant rules or subsequent guidance take effect.