Federal derivatives staff just handed software builders clearer access to regulated prediction markets. On September 17, 2026, the Commodity Futures Trading Commission’s Market Participants Division issued a no-action position covering providers of “passive software.” Staff said it will not recommend enforcement for failure to register as an introducing broker or associated person when those tools only connect traders to already registered firms. The announcement is in CFTC Release 9300-26, and the underlying staff letter is Letter 26-25.
The relief is narrow, intentionally so. It applies when the software itself stays non-custodial, does not exercise trading discretion, and routes activity to registered futures commission merchants, introducing brokers, or designated contract markets. It expands online access to crypto and prediction-market trading through software partners that never take custody of a user’s assets. You do not need to be registered merely for providing connective software to users of registered entities.
Wallet apps and other front-end tools have been circling around event markets for months, waiting to see whether connecting a trader to a licensed venue would turn the vendor into a broker. Thursday’s letter answers that question only with conditions, not a new rule. Product attorneys will still need to review every line twice before anyone ships a new prediction market-related software.
What Letter 26-25 Covers
The position is similar to the earlier relief in Staff Letter 26-09 and is now broadly available to qualifying providers. Staff will not recommend enforcement against a qualifying provider or that provider’s relevant personnel for failing to register as an introducing broker or associated person. The relief applies only to software that facilitates trading with registered FCMs, introducing brokers, and designated contract markets.
A firm that solicited or accepted orders, sent those orders onward, and collected fees or commissions would historically have been pulled toward introducing-broker registration. Staff is softening that line only for software that behaves agnostically and provides a basic service enhancement. Routing and display are allowed; custody, signal generation, and decision-making are not.
Letter 26-25 appears on the Commission’s staff-letters index with introducing-broker and associated-person tags. A matching description sits on the division letter page. These are meant to provide details to software developers so they are not operating solely off media headlines. The relief is only staff-level, not a Commission rule, so it can be modified, withdrawn, or overtaken by later rulemaking.
The practical effect is still immediate. A non-custodial wallet can design a path to a registered FCM or DCM without first being a full introducing-broker shop, as long as the software never crosses into discretion or custody of the derivatives position.
Why the Relief Matters for Event-Contract Distribution
Expanded relief could make it easier for crypto wallets and other apps to offer access to regulated derivatives, including perpetual contracts and prediction markets, without those apps becoming introducing brokers.
Phantom has partnered with Kalshi to allow predictions trading through Phantom’s wallet base, a point also reflected in Bloomberg’s account of the March letter. Expanding that Phantom-specific comfort into a generally available staff position changes the map. A rival wallet no longer has to guess whether copying a similar integration would trigger a registration fight.
The letter paves the way for prediction-market and cryptocurrency trading on certain online platforms. Perhaps related, DraftKings shares retreated Thursday. Traders already using event contracts through brokerage apps are watching whether wallet-native rails will cut fees or just add screens.
What Comes Next for Traders and Builders
The CFTC did not move in a vacuum. CFTC staff issued the software position the same day other federal market regulators kept advancing developer-facing relief after the CLARITY Act stalled in the Senate and SEC’s same-day work on tokenized stocks.
A cleaner software path is not a rule change. Firms that blur that point in advertising will invite the next staff letter to be narrower, not broader, and gains made today could easily be erased.
Watch for three things. First, the letter text, not only the press release. Second, how quickly wallet and brokerage interfaces announce event-contract connections that cite the new CFTC staff position. And third, whether staff follows with formal guidance that locks the conditions in, modifies them, or pulls them back.
Custody redlines remain the constant. Teams that keep keys, cash, or order authority inside the app are not “passive,” no matter how clean the interface looks. The vendors that win the next quarter will be very clear about their non-custodial positions.
References
1. CFTC Staff Issues No-Action Position to Providers of Passive Software, Release 9300-26
4. Bloomberg: Crypto, Prediction Markets Gain CFTC Backing as Agency Eases Platform Rules
5. Bloomberg Law: CFTC to Expand Crypto, Predictions Trading Via Online Platforms
6. Investor’s Business Daily: CFTC Boosts Outlook For Prediction Markets, Crypto Trading
7. Cointelegraph: CFTC Issues No-Action Position for Trading Software Providers
8. The Block: CFTC follows with developer-friendly no-action stance
9. Crypto Briefing: CFTC clears path for passive software providers to skip broker registration
10. Seeking Alpha: CFTC allows expansion of predictions, crypto trading through online platforms
11. Benzinga: CFTC Expands Regulatory Relief for Crypto Developers
12. CoinGape: CFTC Clears Way for Crypto Developers to Build Trading Tools Without Broker Registration
13. Traders Union: CFTC expands relief for passive software providers in derivatives access
