What the CFTC’s New No-Action Relief Really Means for Self-Custody Crypto Wallets

By Latham & Watkins LLP on March 20, 2026

The no-action relief permits use of non-custodial wallet software in connection with CFTC-regulated derivatives trading, subject to certain conditions.

By Yvette D. Valdez, Douglas K. Yatter, Adam Bruce Fovent, and Deric Behar

Key Points

The relief is a meaningful and incremental expansion on existing CFTC staff no-action relief on passive technology service provider and independent software vendor activities.
While the no-action relief is specific to Phantom and is not issued as wide-spread market relief, it provides insight as to the CFTC’s view of when introducing broker registration of technology service vendors may be triggered with regards to trading models involving CFTC-regulated exchanges and intermediary entities.
The no-action letter permits Phantom to offer a self-custody wallet and front-end interface software for trading in CFTC-regulated derivatives without requiring registration as an introducing broker, provided Phantom’s role is limited to passively enabling user transactions.
The no-action relief does not address the implications of self-custody wallet and front-end interfaces enabling access to DeFi derivatives trading, but may be a sign of more guidance and clarity to come from the CFTC.

Introduction

On March 17, 2026, the CFTC’s Market Participants Division (the Division) issued CFTC Letter No. 26-09 (the No-Action Letter) stating that it would not recommend enforcement against Phantom Technologies Inc. (Phantom) in connection with certain proposed activities involving its digital asset self-custody wallet software designed to enable users to trade in CFTC-regulated derivatives.

The No-Action Letter confirms that the Division will not recommend enforcement against Phantom for failure to register with the CFTC as an introducing broker (IB)¹ or against Phantom’s personnel for failure to register as associated persons (APs)² in connection with Phantom’s provision of wallet and front-end interface software. Through this software, users may access CFTC-regulated derivative products trading on a CFTC-regulated designated contract market (DCM), either directly or as brokered customers of a futures commission merchant (FCM).

Importantly, the No-Action Letter is expressly directed to a specific use case of self-custody wallet software in a trading model consistent with the existing market structure for CFTC-regulated exchange-traded derivatives. In that regard, the No-Action Letter does not address the implications of providing self-custody wallet and front-end interface software enabling access to derivatives trading through decentralized finance (DeFi) applications and trading protocols.

The No-Action Letter represents a meaningful and incremental expansion of the existing body of CFTC staff guidance on passive technology service provider or independent software vendor activities that do not require registration as an IB or AP. Effective until further rulemaking on the application of IB registration to software providers, the No-Action Letter may be the first sign of more to come from the CFTC in providing improved certainty and regulatory clarity for innovators in the US derivatives markets.

The Facts and Circumstances

As recounted in the No-Action Letter and familiar to many market participants, Phantom develops and distributes self-custodial cryptoasset wallet software applications for use on a number of blockchains, including Solana and Ethereum. As self-custody wallet software, Phantom’s software allows users to generate and manage cryptographic credentials for viewing, storing, and conducting self-directed cryptoasset transactions and to transmit transaction instructions to cryptoasset trading platforms and protocols.

The No-Action Letter concerns Phantom’s expansion of its self-custodial wallet offering to enable its users to trade in CFTC-regulated derivatives, including event contracts and perpetual contracts trading on CFTC-regulated DCMs (the Proposed Activities). In particular, the Proposed Activities covered by the No-Action Letter entail Phantom providing front-end interface software to facilitate the trading on a DCM (i.e., a CFTC-regulated derivatives exchange) by a user, either directly as a market participant who is a member of the DCM, or indirectly via an FCM or IB that is a member of the DCM.

As described, the front-end interface would function as a passive communication service allowing users to view market data, position information, and product offerings, and to submit orders to Phantom’s collaborator DCMs, FCMs, or IBs. Phantom’s role would be limited to providing access to the software interface on users’ mobile devices or via a browser extension. This would be offered either as a standalone product or as an embedded feature in Phantom’s existing wallet software. Importantly, Phantom would never “hold, control, or take into custody User assets, generate express ‘buy’ or ‘sell’ signals, or exercise discretion with respect to the routing or execution of User orders.”³

Consistent with the existing market structure for CFTC-regulated derivatives trading, the No-Action Letter contemplates that users would at all times maintain the funds or other property securing their derivatives positions in custody with the DCM’s derivatives clearing organization (DCO) or an FCM that is a member of such DCO. Phantom’s software would thus serve only to passively enable users to transact in and transmit orders for CFTC-regulated derivatives products.

Phantom would offer this front-end interface software by contracting with the collaborator DCM, FCMs, or IBs involved. In doing so, Phantom may earn income through revenue-sharing arrangements with such partners or through transaction-based fees assessed directly to interface users.

The Conditional Relief

Building on an existing series of no-action and interpretative letters issued to certain technology service vendors (TSVs) by the Division’s predecessor in the 2000s,⁴ the Division confirmed that it would not recommend an enforcement action for Phantom not being registered as an IB or for its personnel not being registered as APs thereof. The Division reasoned that since Phantom’s involvement in the Proposed Activities will be limited to passively providing software, Phantom will not be affirmatively involved in any particular orders, and will therefore not provide “buy”/”sell” signals or exercise discretion with respect to user orders.

Importantly, the relief provided by the No-Action Letter is subject to a number of conditions:

Phantom, its principals, and any individual engaged in soliciting users of its software interface must not be subject to statutory disqualification⁵ (absent a waiver by the Division);
Phantom must provide users (and users must acknowledge receipt of) disclosures regarding Phantom’s relationship with the collaborator DCMs, FCMs, or IBs, including to disclose conflicts of interest and regarding fees;
Phantom must provide users (and users must acknowledge receipt of) a risk disclosure statement as required under the CFTC’s regulation of FCMs⁶ “to the extent relevant to the trading activity facilitated by Phantom;”⁷
users must be onboarded as direct members of the relevant DCM or as a customer of the FCM or IB providing access thereto, and must continue to have the ability to access the respective DCM, FCM, or IB independently of Phantom;
Phantom must comply with applicable CFTC and National Futures Association (NFA) rules regarding communications with the public and marketing as if Phantom were registered as an IB;⁸
Phantom and any collaborator DCM, FCM, or IB must agree to be jointly and severally liable for any CFTC violations by Phantom or any of its personnel in connection with the request’s contemplated activities;
Phantom must maintain records demonstrating compliance with the conditions of the No-Action Letter and its involvement in CFTC-regulated business;
Phantom must notify the Division if it becomes insolvent or enters a bankruptcy proceeding; and
Phantom must file a notice with the Division agreeing to satisfy the conditions and consenting to the CFTC’s jurisdiction for investigation and enforcement.

Implications and Limits of the No-Action Letter

The No-Action Letter represents a welcome step toward regulatory clarity for developers and financial innovators who have, in the past, faced legal risk and uncertainty regarding the scope of technology service activities that may implicate registration requirements in connection with CFTC-regulated derivatives markets. The No-Action Letter is a helpful refresh and expansion of prior staff guidance regarding TSVs, which dates to the early days of the internet and left open a number of questions and ambiguities for recent financial innovators. Notably, and of potential interest to TSVs outside the digital asset and self-custody software context, the No-Action Letter seemingly goes beyond prior CFTC staff guidance in (i) permitting receipt of transaction-based compensation by revenue share from collaborators or as direct fees from users; and (ii) permitting marketing of TSV services, including the availability of particular derivatives contracts, and introducing and soliciting users to engage with specific collaborators.

With that said, the No-Action Letter is issued to Phantom based on the specific facts presented by it and is not a broadly applicable exemption that the market at large can rely upon. Therefore, similarly situated market participants seeking to rely upon the relief provided must independently submit their own no-action request and obtain their own no-action letter as the relief afforded Phantom does not transfer or extend to others. However, the relief is a clear signal of the CFTC’s view with regards to TSVs facilitating trading through existing CFTC regulated exchanges and brokers.

The No-Action Letter does not address providing relief for DeFi protocols or transactions occurring outside of currently CFTC-regulated platforms. Importantly, however, CFTC Chairman Michael Selig indicated in a recent speech that the agency is actively working on broader guidance clarifying when developers of non-custodial software (including digital wallets and DeFi applications) may trigger intermediary registration requirements. Further, the relief afforded under the No-Action Letter is effective until the CFTC issues “rulemaking or guidance addressing the application of the IB registration requirement to software providers.”⁹ Accordingly, the Commission may have additional plans regarding DeFi or digital assets more broadly.

Follow this and other critical developments on Latham’s US Crypto Policy Tracker.