Regulators are quietly redrawing who counts as a broker in crypto and prediction markets, and the answer is narrowing fast in favor of the apps that never touch customer funds.
The CFTC’s Market Participants Division issued a no-action position on September 17, 2026, in Staff Letter No. 26-25, saying it will not recommend enforcement action against qualifying providers of passive trading software for failing to register as introducing brokers or associated persons. The relief covers providers that offer non-custodial connectivity to CFTC-registered futures commission merchants, introducing brokers and designated contract markets, so long as they exercise zero trade discretion and charge no volume-based commission. The position extends a framework the division first granted to crypto wallet developer Phantom Technologies in March 2026 under Staff Letter 26-09, broadening it so other similarly situated software providers can rely on the same relief directly, without filing an individual request.
For a compliance or product leader building anything adjacent to prediction markets or regulated derivatives, this removes a real barrier: a crypto wallet or trading app can now route users into CFTC-registered venues, including prediction markets and perpetual contracts, without itself becoming a registered broker, provided it never holds funds or picks trades. That collapses months of individualized no-action requests into a standing test any qualifying developer can apply on its own.
The original insight is in what the CFTC chose not to regulate rather than what it did. By defining the exemption around custody and discretion instead of the product being traded, the division built a rule that will keep applying as new derivative products, including new categories of prediction markets, launch on top of the same non-custodial rails, which is exactly the design already shaping debate over how far federal preemption reaches for prediction markets and the broader jurisdictional standoff behind Congress’s stalled crypto market structure bill. Expect wallet providers to treat this letter as the template for expansion into regulated markets while the legislative fix stays stuck.
Source: CFTC
