Wallet to Wall Street: CFTC and SEC Staff Chart Parallel Paths for Noncustodial Crypto Access

In two parallel but complementary developments, federal regulators have moved to clarify when technology providers that offer user-facing interfaces for crypto asset trading may operate without registering as intermediaries. On March 17, 2026, the Market Participants Division (MPD) of the CFTC issued a no-action letter stating that staff would not recommend enforcement action against Phantom Technologies, Inc. (Phantom) for not registering as an IB¹ (or if certain personnel do not register as associated persons (APs)), in connection with Phantom’s proposed noncustodial “wallet” interface that can route users to CFTC-regulated derivatives markets through registered intermediaries. Then, on April 13, 2026, the SEC’s Division of Trading and Markets issued a staff statement outlining conditions under which certain “Covered User Interface Providers” involved in crypto asset securities trading may operate without registering as a BD under § 15(a) of the Securities Exchange Act of 1934.

Both developments share a common regulatory underpinning: Technology providers that serve as passive, noncustodial conduits, without exercising discretion over orders, providing investment advice, or handling customer funds, may be permitted to facilitate access to regulated markets without full intermediary registration. In each case, the relief is conditional, entity and fact specific, temporary, and subject to robust disclosure and compliance obligations. Together, these developments signal a coordinated federal posture toward accommodating fintech innovation within existing regulatory frameworks, while preserving investor and customer protections.

Phantom’s Noncustodial Wallet Model

Phantom currently develops and distributes self-custodial blockchain asset wallet software for use on several major blockchains, which provides users with access to derivative products, including perpetual futures and event contracts. Phantom does not provide custody services for crypto assets and does not handle customer funds. Instead, Phantom’s software enables users to generate and manage cryptographic credentials for viewing, storing, and conducting self-directed transactions.

Phantom proposed offering to act as a technology service vendor to a registered designated contract market (DCM), registered futures commission merchant (FCM), or IBs (collectively, Collaborators). Phantom would provide users with a front-end software interface where users could access trading in CFTC-regulated derivatives through Collaborators, but without Phantom’s affirmative involvement in executing such orders. Users would be able to place orders directly with the Collaborators, and Phantom’s involvement would be limited to providing a user interface. In return, Phantom would be eligible to share in a specified portion of revenue with Collaborators or charge users for access to their software interface. Phantom would embed these features within their existing software interface but would clearly and conspicuously distinguish when a user is engaged with CFTC-regulated activities. Phantom would at no point control custody of user assets, generate express signals to buy or sell, or exercise discretion over routing or execution of orders.

Phantom sought a no-action letter in this instance to address existing ambiguity given that not all of their proposed activities have been cleared by prior CFTC guidance, particularly related to the lack of preexisting relationship between Collaborators and the user.

The CFTC’s Relief: Phantom as a User Interface Only

The March 17, 2026, no-action letter provides that, until the effective date of any relevant rulemaking or guidance, the MPD will not recommend enforcement action against Phantom or its relevant personnel for failure to register as an IB or AP solely as a result of engaging in the specified technology service activities.

Phantom’s role is limited to providing a user interface that enables users to transmit their own orders directly to regulated derivatives markets, without Phantom handling customer funds, exercising discretion over orders, or acting as an intermediary. The relief applies to Phantom’s activities in providing technological solutions that facilitate customer access to regulated derivatives markets, subject to compliance with various conditions set forth in the no-action letter.

The relief is subject to conditions designed to protect users and ensure compliance. Key requirements include:

• User Disclosures: Phantom must provide conflict of interest and risk disclosures to users, who must acknowledge receipt.
• Marketing Compliance: Phantom must comply with CFTC and National Futures Association (NFA) marketing rules as if it were a registered IB.
• Joint Liability: Phantom and each Collaborator must be jointly and severally liable for violations of Commodity Exchange Act (CEA) or CFTC regulations.
• Independent Access: Users must be able to access Collaborators independently of Phantom.

Additional conditions address statutory disqualification, advertising restrictions, recordkeeping, insolvency notification, and consent to CFTC jurisdiction.

Practical Implications

The CFTC’s no-action relief provides a potential pathway for digital wallet providers and fintech companies to pursue analogous relief, enabling customer access to regulated derivatives markets without immediate IB registration. It also shows the CFTC’s willingness to work with companies to determine new ways of delivering access to CFTC-regulated products, while not imposing the regulatory burdens that come with acting as an IB, DCM, or FCM.

The relief is temporary and will remain effective only until superseded by future CFTC rulemaking or guidance, at which point registration or additional compliance obligations may be required. The CFTC is in the process of drafting formal rules for digital assets, and those rules may very well alter the approach set forth in the no-action letter. Thus, the relief afforded to Phantom should be viewed as interim guidance. Firms should consider proactively engaging with regulatory developments and maintaining robust compliance programs addressing CFTC and NFA marketing and disclosure requirements. Ongoing monitoring of regulatory changes and active engagement with the CFTC are important for maintaining eligibility under such no-action relief.

SEC Staff Statement: Broker-Dealer Registration and Covered User Interface Providers

On April 13, 2026, the SEC’s Division of Trading and Markets issued a staff statement addressing whether certain user interfaces utilized to prepare transactions in crypto asset securities must register as BDs under the Securities Exchange Act of 1934. The statement defines a category of “Covered User Interface Providers,” including websites, mobile applications, and browser-based tools, that help users prepare and transmit crypto asset securities transactions through self-custodial wallets. Staff indicated that, subject to specified conditions in line with this interpretative position, it would not recommend enforcement action against such providers for operating without BD registration.

The statement expressly carves out activities that would trigger BD status, including executing trades, handling or having custody of user assets, providing investment advice, and negotiating transactions. To remain outside registration requirements, interface providers must satisfy several conditions:

• No Solicitation or Advice: Providers may not recommend specific trades, solicit particular transactions, or provide investment advice. Users must retain full control over trade parameters such as price, size, and execution preferences.
• Objective Presentation: Where multiple execution options are displayed, the interface must sort or filter based on objective or pre-disclosed criteria (such as price or speed) and may not characterize any route as “best” or “preferred.”
• Fee Neutrality: Fees must be fixed, transparent, and unrelated to trade outcomes, execution venues, or counterparty selection. The statement prohibits payment for order flows or compensation based on the size, value, or occurrence of transactions from those other than the user.
• Disclosure Obligations: Providers must clearly communicate their non-registered status, fee structures, conflicts of interest, system mechanics, cybersecurity controls, and limitations of the interface. Any affiliations with trading venues must be disclosed and treated on an equal footing with unaffiliated venues.
• Venue Monitoring: Providers are expected to implement policies for evaluating and monitoring connected trading venues and assessing factors such as liquidity, transparency, security, and reliability. Default trading parameters must be based on objective criteria and subject to ongoing review.

The statement applies to the use of a Covered User Interface for crypto asset securities transactions. It does not apply to non-tokenized securities. The staff statement is not a formal rule or binding regulation; it reflects the Division’s current interpretive position and will remain in effect for five years unless superseded by Commission-level rulemaking.

Cross-Agency Implications and Key Takeaways

• Digital wallet providers and fintech companies may facilitate customer access to CFTC-regulated derivatives markets without IB registration, provided they act solely as passive, noncustodial technology service vendors and do not handle customer funds, generate trading signals, or exercise discretion over orders.
• The relief is conditioned on compliance with several requirements, including user disclosures, marketing compliance with CFTC/NFA rules, joint and several liability arrangements with Collaborators, and consent to CFTC jurisdiction.
• The no-action position is temporary and may be superseded by future CFTC rulemaking or guidance, at which point registration or additional compliance obligations may be required.
• The SEC’s Division of Trading and Markets has separately indicated that “Covered User Interface Providers” facilitating crypto asset securities transactions may avoid BD registration, provided they function as neutral, nondiscretionary tools and satisfy conditions relating to disclosure, fee neutrality, objective presentation of execution options, and venue monitoring.
• Both the CFTC and SEC positions reflect a shared “passive interface” framework: Technology providers that do not exercise discretion, hold custody of assets, or provide advice may facilitate market access without intermediary registration. Both agencies impose conditions requiring transparency, disclosure of conflicts, and compliance with applicable marketing and conduct standards, and both forms of relief are temporary, conditional, and subject to supersession by future rulemaking. The SEC’s emphasis on operational neutrality and its prohibition on subjective characterizations of trading routes may require interface redesigns for platforms that currently feature editorial or algorithmic ranking of execution options.
• Firms operating interfaces that touch both CFTC-regulated derivatives and SEC-regulated securities should assess compliance with each agency’s conditions independently. The SEC’s broader “Reg Crypto” framework is currently under review by the Office of Information and Regulatory Affairs, which may introduce additional exemptions for early-stage crypto projects and further clarify the regulatory treatment of tokens transitioning out of securities status. Firms should monitor these developments closely, as full registration requirements may be reinstated at any time.

Footnotes

¹ Under § 4d(g) of the CEA, 7 U.S.C. §§ 1–27f (2024), it is unlawful for any person to act as an introducing broker unless registered with the CFTC.