Phantom gets CFTC no-action letter for planned derivatives feature

The U.S. Commodity Futures Trading Commission’s Market Participants Division issued a staff no-action letter stating it will not recommend enforcement action to require Phantom to register as an introducing broker for a planned derivatives interface, so long as specific conditions are met.

According to the letter, Phantom may develop a software interface within its self-custodial wallet that enables users to view derivatives market data, monitor positions, and transmit orders to registered exchanges or brokers. The staff outlined that Phantom’s role must remain limited to a front-end portal through which users send trading instructions directly to designated contract markets or other registered intermediaries.

The relief is conditioned on several requirements. Phantom must present users with disclosures addressing derivatives trading risks and potential conflicts of interest. It must maintain compliance policies that govern how the interface is marketed and how the company communicates with users. The company is also required to keep records tied to its derivatives-related activities.

Based on the Phantom wallet review, the company today offers self-custodial wallet applications that let users store and manage digital assets across multiple blockchains. The planned expansion would add connectivity for derivatives access without Phantom acting as a broker, provided all user orders are routed to registered venues or intermediaries and handled by those entities.

The action arrives as U.S. regulators assess how existing financial rules apply to developers of non-custodial crypto software. Recent court and enforcement matters involving privacy tools and coin-mixing services, including the prosecution of Tornado Cash co-founder Roman Storm and the sentencing of Samourai Wallet co-founder Keonne Rodriguez, have drawn attention to when software providers may be treated as intermediaries under federal law.

Earlier this month, the CFTC indicated it is preparing guidance to clarify when developers of non-custodial wallets and decentralized finance applications could fall under intermediary registration requirements.