The CFTC’s Market Participants Division issued a new no-action position on September 17 for providers of “passive software,” expanding staff guidance that separates non-intermediary software from traditional broker activity.
The policy can be relevant to crypto and prediction-market applications, but it is narrower than the headline “CFTC exempts crypto apps from broker rules.”
What staff is saying
Subject to specified conditions, staff says it will not recommend enforcement action for failure to register as an introducing broker (IB) or associated person (AP) solely because a qualifying provider offers or markets software that facilitates a user’s trading with regulated U.S. market participants.
The relevant counterparties can include registered futures commission merchants, registered introducing brokers and designated contract markets.
Why “passive” matters
The distinction turns on whether software is functioning as a neutral technological interface or as an intermediary that solicits, recommends, controls or handles customer trading in ways associated with broker functions.
Developers therefore need to examine order routing, recommendations, custody, compensation, discretion, customer solicitation, transaction control and relationships with registered intermediaries.
What the relief does not do
The position does not automatically protect custodial crypto brokers, offshore perpetual exchanges, software that takes possession of customer assets, discretionary trading agents, unregistered DCM/FCM activity, every DeFi protocol or developers from unrelated sanctions, AML, fraud or other requirements.
It is also a staff no-action position, not a permanent Commission rule or a court holding.
Relationship to prior guidance
The CFTC says the position is similar to prior Staff Letter 26-09 but is now broadly available to other passive-software providers that meet the stated conditions.
That matters because firms no longer need to rely solely on another company’s fact-specific letter as indirect guidance.
Why this matters to crypto infrastructure
Many U.S.-facing crypto apps want to let users access regulated derivatives or event-contract markets without themselves becoming full intermediaries.
The position can reduce legal uncertainty for non-custodial front ends, software routing interfaces, API layers, portfolio interfaces and certain wallet/trading integrations.
Implementation details determine whether the provider remains inside the passive-software model.
Entity and product boundary
The relief concerns the provider’s registration status as an IB/AP in the described circumstances.
It does not mean the underlying futures, options, swaps or event contracts are unregulated, and it does not make an offshore venue registered simply because a front end is passive.
Evidence Status
Confirmed / Official CFTC
Market Participants Division issued the position September 17; it addresses passive-software providers; it concerns staff recommendations not to enforce IB/AP registration failures under stated conditions; it is tied to trading with registered FCMs, IBs or DCMs; it is similar to prior Staff Letter 26-09.
Product-Specific / Requires Legal Analysis
Whether a particular app is truly passive, whether compensation or solicitation creates broker activity, whether custody/discretion takes the provider outside relief, and whether other laws apply.
Risk Assessment
Medium regulatory / intermediary-classification significance.
What to Watch Next
First firms relying on the position, staff interpretations, enforcement against apps outside the conditions, Commission-level rulemaking and interaction with SEC/tokenized-asset policy.
FAQ
Did the CFTC exempt all crypto apps from registration?
No.
What registration categories are involved?
Introducing broker and associated-person registration under the stated conditions.
Can a custodial broker rely on this automatically?
No.
Is this a permanent rule?
No. It is a staff no-action position.
Does this automatically cover offshore perpetual platforms?
No.
Why does this matter to developers?
It gives clearer conditions under which software can remain a technology layer rather than a broker intermediary.