Phantom secures CFTC no-action relief, enabling crypto wallet access to regulated derivatives markets.

This indicates that Phantom can function as a non-custodial interface linking users to authorized derivatives platforms, eliminating the need for broker registration under certain circumstances.

Key points:

• The CFTC has announced it will not take enforcement actions against Phantom for functioning as a non-custodial interface that links users to registered derivatives platforms, thereby eliminating the necessity for broker registration under certain criteria.
• Phantom regards the relief as “first-of-its-kind,” facilitating in-app access to regulated derivatives and event contracts while indicating a possible regulatory framework for other crypto wallet providers.

Phantom, a creator of self-custodial cryptocurrency wallets that are especially favored in the Solana ecosystem, obtained a no-action letter from the U.S. Commodity Futures Trading Commission (CFTC), permitting it to provide users with access to specific regulated derivatives markets without the requirement to register as a broker.

In a statement released on Tuesday, the CFTC’s Market Participants Division stated it would not suggest enforcement action against Phantom for not registering as an introducing broker, as long as the company adheres to a defined set of conditions. This relief pertains to Phantom’s software serving as a non-custodial interface that connects users directly with entities registered with the CFTC, including futures commission merchants and designated contract markets.

Phantom noted in a blog entry that the letter allows it to incorporate access to regulated derivatives and event contracts directly within its application through registered partners, ensuring that users place orders directly with exchanges. The firm highlighted that it does not hold customer funds or facilitate trades.

Phantom characterized the outcome as “first-of-its-kind” for this framework and a result of proactive interactions with regulators. “Instead of developing first and seeking forgiveness later, we adopted a different strategy,” the team mentioned in the blog post, stating that early discussions with the CFTC clarified how non-custodial interfaces can function within current regulations.

"An essential element of making crypto secure and user-friendly is the creation of financial products governed by transparent, sensible regulations. When appropriate, engaging with regulators early to discover compliant pathways for these new products yields better results for our users, the industry, and the regulators themselves. This letter serves as evidence of that,” remarked Phantom CEO Brandon Millman in a blog post.

“We appreciate the CFTC for collaborating with us on this genuinely unique issue, and we anticipate introducing more innovative products to consumers in a manner that instills confidence and sets a favorable precedent," he added.

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