Key Insights
- US CFTC news today focuses on conditional broker-registration relief for qualifying passive software.
- SEC separately grants temporary conditional relief for certain tokenized stock trading.
- The Senate failed to advance the CLARITY Act after a 49-50 cloture vote.
The latest US CFTC updates provide qualifying passive software providers with a broader pathway to bypass introducing crypto broker registration under specific conditions. On September 17, the Commodity Futures Trading Commission’s Market Participants Division released this no-action position.
Agency staff indicated they would not recommend enforcement actions regarding certain crypto broker registration mandates for eligible providers. This relief applies to software that enables user trading through regulated futures intermediaries and designated contract markets.
This move builds upon a framework the CFTC previously extended to self-custodial wallet software. On the same day, the SEC independently announced temporary exemptions for select tokenized stock trading venues. Both regulatory decisions arrived on the heels of the Senate’s failure earlier in the week to advance federal digital asset market-structure legislation.
US CFTC News: Crypto Regulation Expands Software Relief
According to the CFTC’s Market Participants Division, the updated stance broadly encompasses providers of passive software, provided they meet all conditions outlined in the staff letter.
Under this directive, division staff will refrain from recommending enforcement action for omitting introducing broker registration. The protection extends similarly to associated personnel who might otherwise be subject to registration mandates.
Nonetheless, the exemption is strictly limited to the software functions explicitly outlined by the division. Providers are permitted to support trading activities between users and registered futures commission merchants, introducing brokers, and designated contract markets.
This recent regulatory step follows an earlier relief order issued in March to Phantom Technologies, a developer of self-custodial crypto asset wallet software.
In that prior instance, Phantom outlined software designed to link users with designated contract markets and registered futures firms. CFTC staff subsequently approved conditional no-action relief concerning associated-person and introducing broker registration for those operations.
The September announcement broadens access to similar treatment for other qualifying passive software providers, contingent upon adherence to the division’s stipulations.
US SEC Issues Separate Innovation Exemption
Concurrently, the Securities and Exchange Commission unveiled its own regulatory decision hours prior, granting temporary and conditional relief for Tokenized Securities Venues (TSVs).
This exemption enables eligible TSVs to facilitate the trading of tokenized National Market System stocks via permissioned liquidity pools and automated market makers. It temporarily exempts qualifying platforms from the Exchange Act’s formal definition of an exchange.
However, the SEC tied the exemption to several strict operating guidelines. Under the established framework, tokenized equities are subjected to strict caps on volume and symbols.
Additionally, TSVs must verify that tokenized shares confer identical rights to standard traditional NMS equities. Issuers also retain the right to object when an unaffiliated third party tokenizes their financial assets.
The SEC mandates that smart contracts must be public and auditable on permissionless, public distributed ledgers. Furthermore, trading must halt immediately if the underlying stock suspends trading on its primary exchange.
SEC Chairman Paul Atkins characterized the initiative as a temporary measure while the Commission reviews broader rulemaking. Jamie Selway, Director of Trading and Markets, noted that his division stands ready to collaborate with entities looking to run TSVs.
US CFTC News: Agencies Act After CLARITY Vote
Both agency announcements followed a pivotal Senate procedural vote regarding federal cryptocurrency market-structure rules. On September 15, lawmakers voted 49-50 against a cloture motion to proceed with H.R. 3633.
Because the measure fell short of the required 60 votes to clear the procedural hurdle, the legislation failed to progress at that time.
Following the vote, Atkins stated that the SEC would press forward using its current statutory authority. His September 17 remarks directly connected the new Innovation Exemption to Congress’s halted attempt to pass the CLARITY Act.
Similarly, CFTC Chair Mike Selig affirmed that his agency intends to pursue rulemaking under its existing statutory mandate. Meanwhile, the latest passive-software guidance remains squarely directed at clarifying crypto broker registration duties for eligible providers.
Frequently Asked Questions
What did the US CFTC announce regarding passive crypto wallets?
The CFTC’s Market Participants Division issued a conditional no-action position granting broker-registration relief to qualifying passive software providers and self-custodial wallet tools.
Why did the CFTC and SEC issue these exemptions now?
The regulatory actions followed closely after the US Senate failed to advance the CLARITY Act market-structure legislation following a 49-50 cloture vote.
What does the SEC’s temporary relief cover?
The SEC’s Innovation Exemption provides temporary conditional relief for Tokenized Securities Venues (TSVs) to trade tokenized National Market System stocks.
Who leads the SEC and CFTC?
Paul Atkins serves as SEC Chairman, while Mike Selig serves as CFTC Chair.
Michael Gachihi Nderitu 
