CFTC no-action position was issued on September 17. The regulator confirmed it won’t pursue enforcement actions against certain crypto developers.
Specifically, this applies to Passive Software Providers. These firms build trading tools for derivative products. The relief applies even if they don’t register as brokers.
Why the CFTC no-action position matters
The Market Participants Division announced the position in a press release. It issued the letter in response to a PSP. That PSP enables trading in Commission-regulated derivative products.
The Division confirmed it will not recommend enforcement action. This applies to developers who fail to register as introducing brokers. However, this is subject to certain conditions. The relief lasts until a Commission rulemaking addresses the issue.
The release came just hours after the SEC released an innovation exemption order. That order covers tokenized stocks. It grants five-year exemptive relief to qualifying venues.
SEC Chair Paul Atkins and CFTC Chair Mike Selig have signaled continued clarity. This comes despite the CLARITY Act setback. The Senate failed to invoke cloture earlier this week.
Ten conditions for crypto developers
The CFTC outlined ten conditions for the relief. First, developers must not be subject to statutory disqualification. Second, users must be direct members or customers. Specifically, they must access the regulated exchange independently of the PSP.
The PSP must also avoid certain advertising. If registered as an introducing broker, such promotions would require NFA pre-approval. Additionally, the PSP must file a notice with the CFTC Division. The notice must agree to satisfy these conditions. It must also consent to the Commission’s jurisdiction.
