CFTC Expands Regulatory Relief for Crypto Developers

Federal regulators are moving ahead with crypto-friendly measures after the CLARITY Act stalled in the Senate.

The CFTC on Thursday expanded regulatory relief for software developers just hours after the SEC opened a path for tokenized stock trading.

Why CFTC’s Step Holds Importance

CFTC’s Market Participants Division issued a no-action position for providers of passive trading software, allowing qualifying developers to facilitate access to regulated derivatives markets without registering as introducing brokers or associated persons.

The relief applies when software connects users with registered futures commission merchants, introducing brokers and designated contract markets, subject to specified conditions.

The move expands on the relief that CFTC granted to crypto wallet provider Phantom Technologies in March.

"This is a significant step forward because it takes what was previously Phantom-specific relief and turns it into a framework that other software providers can build around," Solana Policy Institute General Counsel Patrick Wilson told The Block.

Digital Chamber CEO Cody Carbone called the move an important step toward removing regulatory uncertainty that has weighed on software development in derivatives markets.

SEC Launched "Innovation Exemption"

The CFTC action came the same day the SEC unveiled its long-awaited "Innovation Exemption," providing temporary, conditional relief for platforms seeking to facilitate on chain trading of tokenized U.S. stocks.

Under the SEC framework, qualifying Tokenized Securities Venues can operate permissioned automated market makers and liquidity pools for tokenized National Market System stocks without being treated as exchanges.

The exemption is scheduled to last five years, The Block reported.

SEC Chair Paul Atkins described it as a bridge toward more durable rules and said longer-term rulemaking remains necessary.

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