Is a wallet that shows you a price and passes your order to an exchange a broker? For years US derivatives rules left that question open, and the safest answer for developers was to stay away. On Thursday, September 17, 2026, the Commodity Futures Trading Commission’s staff gave a clearer answer: if the software stays passive and never touches user funds, it doesn’t have to register.
The letter is narrow — it covers CFTC-regulated derivatives, not every kind of crypto trade. But the line it draws is the one that matters for self-custody everywhere: custody and discretion make you an intermediary; code that simply relays your decision does not.
Key facts
- On September 17, 2026, the CFTC’s Market Participants Division said staff will not recommend enforcement against “passive software” providers for failing to register as introducing brokers.
- The no-action position covers wallet and front-end software that lets users view market data and send orders for CFTC-regulated derivatives, including event contracts and perpetuals, directly to registered brokers and exchanges.
- To qualify, the software must have no discretion over trades, must not steer orders or give advice, and the provider cannot hold user funds.
- The relief comes with ten conditions, including conflict-of-interest disclosures, onboarding users through registered firms and record-keeping.
- It widens a March 2026 no-action letter that applied only to Phantom; a future commission can still reverse it, because no-action letters are not law.
- The same day, the SEC released a five-year “innovation exemption” for tokenized stocks, effective immediately and conditioned on sanctions compliance and KYC/AML.
What did the CFTC decide on September 17, 2026?
The CFTC’s Market Participants Division issued a no-action position: its staff will not recommend enforcement against providers of “passive software” that connect users to CFTC-regulated derivatives markets without registering as introducing brokers, as long as the software stays passive, holds no user funds and meets ten conditions.
In practice this covers wallets and front-ends where you can see market data and send an order for an event contract or a perpetual straight to a registered broker or exchange. The regulated firm still executes, clears and onboards you. The software is the window, not the counter.
Until now, only one company had that comfort. In March 2026 the CFTC gave Phantom-specific relief for its self-custodial wallet. As PYMNTS reported, the new letter extends the same treatment to other non-custodial software providers that don’t hold users’ funds or make decisions about their trades.
Patrick Wilson of the Solana Policy Institute told The Block that it turns what was Phantom-specific relief into “a framework that other software providers can build around.” The Digital Chamber’s Cody Carbone said it “removes a major regulatory ambiguity.”
What counts as “passive software”?
Passive software is a tool that shows you information and transmits the orders you decide to place, without holding your money, choosing trades for you, steering you toward a venue or giving advice. If the software makes decisions or controls funds, it is acting like a broker; if it only relays yours, the CFTC staff now treats it as software.
No custody
The provider cannot hold user funds. Your assets stay with you or with the registered firm you onboarded with — never in the developer’s account. This is the same line that separates a self-custodial wallet from an exchange account.
No discretion, no steering, no advice
The software cannot decide what or when you trade, cannot route your order to a venue for its own benefit and cannot tell you what to buy. According to Lowenstein Sandler’s crypto brief, the relief also bars providers from generating trading signals.
Ten conditions
Passivity alone isn’t enough. Providers must disclose conflicts of interest and risks, make sure users are onboarded directly by registered intermediaries and keep proper records, among ten conditions in total. The registered firms keep their full obligations.
Hold the funds or make the call, and you’re an intermediary. Relay the user’s decision, and you’re software.
Why does this matter after the CLARITY Act failed?
It shows that US crypto policy is now moving through regulators rather than Congress. The Senate blocked the CLARITY Act on September 15, and two days later both the CFTC and the SEC acted on their own — the CFTC on wallets and front-ends, the SEC on tokenized stocks. The pace is now set by agency letters and exemptions.
On September 14, before the vote, SEC Chair Paul Atkins said the agency would move forward “with or without” CLARITY. The Senate outcome, covered in our piece on the 49–50 CLARITY vote, tested that promise within days.
The SEC’s contribution on September 17 was a five-year “innovation exemption” for on-chain trading of tokenized stocks, effective immediately. It is not permissionless: platforms must run sanctions screening and KYC/AML. That is the other half of the picture — regulators are opening doors, but with compliance gates attached.
There is a catch for both. No-action letters and exemptions are staff and agency positions, not statutes. The industry’s own caveat is that a future commission can reverse them. They reduce ambiguity today; they don’t lock anything in.
Does the CFTC letter apply to crypto swap services?
Not directly. The September 17 letter is about software that routes orders for CFTC-regulated derivatives — event contracts and perpetuals — to registered brokers and exchanges. It says nothing about spot crypto swaps. What carries over is the principle: software that doesn’t hold funds or decide trades is a different category from an intermediary.
That principle is how non-custodial tools already work. A self-custodial wallet signs what you approve. A swap aggregator shows quotes and passes your choice to a provider. Neither sits on your balance. The differences between these models are laid out in our DEX vs CEX vs swap aggregator comparison.
What it means for swap users
SwapZilla is built on the same custody line the CFTC just drew for derivatives front-ends. There is no account and no balance: you choose a pair, compare quotes from several licensed exchange providers, and send coins to a deposit address; the output goes straight to the wallet you entered. SwapZilla itself never holds the funds; the swap is executed by the provider you picked. The flow is explained in how it works.
For builders, the same model is available through the developer docs and the exchange API, so a wallet or app can offer swaps without taking custody. The CFTC letter doesn’t cover that — but it confirms that US regulators increasingly look at who holds the money.
Final thoughts
The CFTC’s September 17 letter is modest on paper: a staff position, for derivatives, with ten conditions, reversible by a future commission. Its signal is larger. After Phantom-only relief in March, US staff now treat passive, non-custodial interfaces as a category — software, not gatekeepers.
With Congress stalled after CLARITY, that is how rules will be written for a while: letter by letter. The test running through all of them is simple enough to apply to any tool you use. Who holds the funds, and who makes the call?
Not holding your coins isn’t a loophole. It’s a different job.