CFTC looks to lock in Phantom-style protections for non-custodial wallets
The Commodity Futures Trading Commission is preparing formal rules that would protect certain non-custodial crypto wallet developers from broker-registration requirements — turning a March no-action decision for Phantom Technologies into broader, binding guidance.
Speaking Tuesday at Consensus Miami, CFTC Chair Rostin Behnam said the agency wants to codify the March 17 no-action letter for Phantom “very soon” and prefers rulemaking to ad hoc staff relief. The agency plans to roll out protections in stages, Behnam said, to give wallet builders clearer direction as they design and offer software in the U.S.
What the Phantom letter did — and what rulemaking would expand
The March no-action letter said the CFTC’s Market Participants Division would not recommend enforcement against Phantom for failing to register as an introducing broker or associated person, provided the firm meets certain conditions. Phantom’s proposal involved offering self-custodial wallet software that facilitates trades with registered futures commission merchants, introducing brokers and designated contract markets without holding customer funds.
No-action letters apply narrowly to the request at hand. By contrast, formal rules would create a predictable, market-wide framework for non-custodial wallet providers and similar software developers who only translate user instructions into blockchain commands rather than custody client assets or act as financial intermediaries.
Why this matters for developers and the market
A codified Phantom position would reduce regulatory uncertainty for teams building wallets, front ends, trading interfaces and other neutral software. It draws a crucial line: neutral, self-custodial tools that don’t control customer funds may be treated differently from firms that custody assets or function like brokers — which are subject to registration and oversight under U.S. derivatives law.
Process, timing and public engagement
The CFTC has not yet released proposed rule text. Any formal rule would likely go through a public comment period before adoption, and the agency says it will proceed in stages to give firms real-time clarity as they build.
How this fits with SEC moves and industry lobbying
Regulatory clarity for crypto interfaces is also moving at the Securities and Exchange Commission. On April 13 the SEC staff issued interim guidance on broker-dealer registration for user interfaces linked to crypto-asset securities, stating the guidance will be withdrawn after five years unless the commission acts sooner. DeFi proponents — including the DeFi Education Fund, Aave Labs, Uniswap Labs, Paradigm and Andreessen Horowitz — have urged the SEC to convert that temporary guidance into binding rules so non-custodial interfaces aren’t treated as brokers when they merely relay user instructions to blockchains.
Prediction markets and federal pushback against state laws
Selig also reiterated that prediction markets fall squarely under the CFTC’s federal authority, and the agency will continue legal action against states that attempt to block federally registered markets. The CFTC has already sued Arizona, Connecticut and Illinois over state actions targeting CFTC-registered event markets, and on April 24 it sued New York to stop the state from applying gambling laws to federally registered contract markets. The agency argues Congress intended a national framework for these markets — not a patchwork of state rules.
Bottom line
A move from case-by-case no-action relief to formal rulemaking would be a major win for wallet builders seeking predictable regulatory treatment. It would also signal the CFTC’s intent to assert clear, federally driven standards for how neutral crypto software is treated under derivatives law — even as related debates play out at the SEC and in state courts.
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