CFTC Clears Phantom to Connect Users to Regulated Derivatives Markets

In a determination that could signifier however self-custodial cryptocurrency wallets interact with regulated markets successful the United States, the U.S. Commodity Futures Trading Commission has allowed Phantom Technologies to connection derivatives entree without registering arsenic an intermediary.

The CFTC’s Market Participants Division issued the "no-action" letter connected Tuesday, efficaciously promising not to prosecute enforcement enactment against Phantom for failing to registry arsenic an introducing broker. The determination specifically covers the Phantom bundle wallet, which acts arsenic a span connecting idiosyncratic users to registered futures committee merchants, brokers, and designated declaration markets.

“As America cements its presumption arsenic the crypto superior of the world, wide rules of the roadworthy for bundle developers are critical,” CFTC seat Mike Selig wrote connected X. “Today’s unit no-action missive delivers agelong overdue clarity for non-custodial integer wallet bundle providers.”

While the alleviation provides a important tailwind for the firm, it is not a broad pass. The CFTC’s presumption is contingent connected a circumstantial acceptable of conditions designed to support marketplace integrity and user safety.

“The process that led to Phantom's nary enactment alleviation is however the regulatory process should work,” Phantom Technologies General Counsel Kevin Jacobs said successful a statement. “With acknowledgment to the CFTC's willingness to unfastened their doors to facilitate innovation, we proactively engaged with the CFTC to question clarity connected however a non-custodial interface similar Phantom could connection entree to regulated markets done a registered partner, without acting arsenic an intermediary that needs its ain registration.”

While helium praised the ruling, Jacobs acknowledged its limits, saying it does not screen DeFi derivatives—price-based trading contracts offered done blockchain apps—or tokenized prediction markets, similar Polymarket.

The determination arrives arsenic crypto firms progressively question clarity connected however self-custodial tools acceptable into bequest fiscal frameworks. In January, a bipartisan Senate measure was introduced to clarify that crypto developers who constitute oregon support blockchain codification shouldn’t beryllium treated arsenic wealth transmitters—unless they really power users’ funds.

“Phantom ne'er touches lawsuit funds,” Jacobs wrote.

While the CFTC did not sanction immoderate different wallet developers, Phantom—which chiefly serves users connected the Solana blockchain network—suggested that this result could service arsenic a viable exemplary for different wallet providers looking to integrate with regulated markets portion maintaining a non-custodial structure.

"A captious portion of making crypto harmless and casual to usage is gathering fiscal products that are governed by clear, common-sense regulations," Phantom CEO Brandon Millman said successful a statement. "When warranted, engaging regulators aboriginal to find compliant pathways for these caller products produces amended outcomes for our users, for the industry, and for regulators themselves. This missive is impervious of that.”

Despite the contiguous relief, the CFTC maintained its prerogative to displacement course. The bureau noted that this no-action presumption is an administrative shortcut that could yet beryllium superseded by ceremonial rulemaking oregon broader manufacture guidance.

Still, Jacobs said the determination reflects the company’s absorption connected gathering compliant, user-focused products.

“Phantom was built connected the content that crypto should beryllium harmless and casual to use,” Jacobs wrote. “We're committed to continuing to pb the mode connected processing products that are innovative, compliant, and enactment the idiosyncratic first.”

The CFTC did not instantly respond to Decrypt's petition for comment.