America’s top financial watchdogs aren’t waiting for the Clarity Act to bring clarity to the nation’s crypto markets.
Following yesterday’s SEC unveiling of the agency’s new innovation exemption for tokenized stocks, the CFTC’s Division of Market Participants has abandoned a follow-up advance: a no-action letter that takes a wallet compliance designation and opens it to all trading software, i.e. including other crypto projects.
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Remember that in March 2026, the CFTC granted Phantom, that is to say the wallet, a non-action position allowing it to create an interface that directs users to CFTC-regulated derivatives products (like event-based contracts and perpetuals) without registering as introducing brokerCatch-all term used by the CEA to designate any person soliciting or accepting orders for derivative products for remuneration.
Phantom’s setup, which did not require users to have a pre-existing broker relationship, did not align with the CFTC’s older “TSV” no-action letters from 2006 to 2008, which were narrower. So the agency wrote a new one to Phantom, with new conditions regarding disclosures, risk declarations, record keeping, joint liability if things go wrong, etc.
One problem though. A letter of no action only protects the company to which it is addressed. No one else could trust Phantom’s clarification.
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So what changed yesterday was the CFTC’s publication of Staff letter 26-25which takes the exact setting and conditions of Phantom and opens them up to everything Passive software provider (PSP), i.e. interfaces or wallets that direct users to a regulated derivatives venue without holding funds, generating buy/sell recommendations, or exercising order discretion. Meet the same conditions as Phantom, benefit from the same protections.
Of course, it should be noted that this new letter explicitly states that PSPs should not be limited to cryptography at all. These terms may apply and work for any software that performs passive commercial routing. Yet, naturally, with the pipeline from cybercriminals to wallets increasing over the past year, this is an extremely relevant green light for DeFi wallets and interfaces that want to connect users to CFTC-regulated products like criminals without becoming a registered broker themselves.
The big picture
Similar to the SEC’s innovation exemption, the CFTC’s latest no-action ruling East a productive step forward for crypto in the United States, even if it is not a panacea for the regulatory needs of crypto in America.
Remember, a no-action letter is just a promise from staff not to recommend enforcement. It’s not a rule, and it’s only good “until the effective date of a Commission regulation,” meaning it can be restricted or removed if agency leadership deems it necessary later.
However, this regulation may already be changing. Yesterday, the CFTC also filed a new rule, Regulation of crypto asset transactions and regulation of crypto asset marketswith the OIRA wing of the White House for review. This initiative is still in the early “pre-rule” stage, with the agency refusing to detail what’s inside just yet.
The crucial question is whether creating non-custodial software can help you criminally continued, is still open. Coin Center published an opinion article yesterday (mainly about AI) that the fact that open source software is “unstoppable” does not protect the humans who write it, because governments will simply sue the promoter instead, as we saw in the case of Roman Storm on Tornado Cash.
Indeed, Storm was convicted last year on one count of creating a privacy tool, and his new trial on the much more serious money laundering charges and sanctions were recently pushed back to April 2027. In crypto, it’s scandalous that the case still hasn’t been dropped (especially with the Trump admin’s pro-crypto overtures), which is why Coin Center’s Michael Lewellen is separately suing the Department of Justice, seeking a declaration that writing non-custodial OSS is not a crime in the first place.
Certainly, the CFTC has no say in the affairs of the DOJ, nor those of the SEC, etc. It cannot solve all the problems of American cryptography by itself. But their progress in protecting passive software creators East edifying and comforting progress, even if it is limited to the regulation of brokers and not to crime in general. This progress is to be applauded, but we still need it on other fronts before we can truly celebrate.