CFTC Clears Phantom to Connect Users to Regulated Derivatives Markets

In brief

• The CFTC’s Market Participants Division issued no-action relief to Phantom Technologies, letting it connect users to regulated futures markets without registering as an introducing broker.
• The decision does not extend to DeFi derivatives or tokenized prediction markets.
• The CFTC said it may issue formal rulemaking that supersedes the letter.

In a move that could shape how self-custodial cryptocurrency wallets interact with regulated markets in the United States, the U.S. Commodity Futures Trading Commission has allowed Phantom Technologies to offer derivatives access without registering as an intermediary. The CFTC’s Market Participants Division issued the “no-action” letter on Tuesday, effectively promising not to pursue enforcement action against Phantom for failing to register as an introducing broker. The decision specifically covers the Phantom software wallet, which acts as a bridge connecting individual users to registered futures commission merchants, brokers, and designated contract markets. “As America cements its position as the crypto capital of the world, clear rules of the road for software developers are critical,” CFTC chair Mike Selig wrote on X. “Today’s staff no-action letter delivers long overdue clarity for non-custodial digital wallet software providers.”

While the relief provides a significant tailwind for the firm, it is not a blanket pass. The CFTC’s position is contingent on a specific set of conditions designed to maintain market integrity and consumer safety. “The process that led to Phantom’s no action relief is how the regulatory process should work,” Phantom Technologies General Counsel Kevin Jacobs said in a statement. “With thanks to the CFTC’s willingness to open their doors to facilitate innovation, we proactively engaged with the CFTC to seek clarity on how a non-custodial interface like Phantom could offer access to regulated markets through a registered partner, without acting as an intermediary that needs its own registration.”  While he praised the ruling, Jacobs acknowledged its limits, saying it does not cover DeFi derivatives—price-based trading contracts offered through blockchain apps—or tokenized prediction markets, like Polymarket.

The decision arrives as crypto firms increasingly seek clarity on how self-custodial tools fit into legacy financial frameworks. In January, a bipartisan Senate bill was introduced to clarify that crypto developers who write or maintain blockchain code shouldn’t be treated as money transmitters—unless they actually control users’ funds. “Phantom never touches customer funds,” Jacobs wrote. While the CFTC did not name any other wallet developers, Phantom—which primarily serves users on the Solana blockchain network—suggested that this outcome could serve as a viable model for other wallet providers looking to integrate with regulated markets while maintaining a non-custodial structure. “A critical part of making crypto safe and easy to use is building financial products that are governed by clear, common-sense regulations,” Phantom CEO Brandon Millman said in a statement. "When warranted, engaging regulators early to find compliant pathways for these new products produces better outcomes for our users, for the industry, and for regulators themselves. This letter is proof of that.” Despite the immediate relief, the CFTC maintained its prerogative to shift course. The agency noted that this no-action position is an administrative shortcut that could eventually be superseded by formal rulemaking or broader industry guidance. Still, Jacobs said the decision reflects the company’s focus on building compliant, user-focused products. “Phantom was built on the belief that crypto should be safe and easy to use,” Jacobs wrote. “We’re committed to continuing to lead the way on developing products that are innovative, compliant, and put the user first.” The CFTC did not immediately respond to Decrypt’s request for comment.