Catenaa, Tuesday, May 05, 2026- The Commodity Futures Trading Commission said it will draft rules to protect non-custodial crypto software developers from broker registration, following a recent exemption granted to Phantom Wallet, as Chair Michael Selig outlined plans to formalize the agency’s stance at a major industry conference in Miami.
The proposed rulemaking seeks to clarify that developers offering self-custodial tools do not need to register as brokers if they do not control user funds or trading decisions. The effort builds on a no-action letter issued in March that shielded Phantom from enforcement.
Selig said the agency prefers formal rules over temporary relief measures. The goal is to give clearer guidance so firms can develop software in the US without regulatory uncertainty.
The move comes as federal agencies increase efforts to define how crypto services fit within existing financial rules.
Control your own assets
Non-custodial software allows users to control their own assets without relying on intermediaries. Regulators have struggled to classify these tools, especially when they interact with trading platforms.
The CFTC’s position signals a shift toward distinguishing between service providers and passive technology developers. Similar thinking has emerged at the Securities and Exchange Commission, which recently indicated that certain DeFi interfaces may not qualify as brokers.
This alignment suggests growing coordination between US regulators on digital asset oversight.
Reduced Legal Risk
Clearer rules could reduce legal risk for developers building wallets and decentralized applications. That may encourage more firms to base operations in the US rather than overseas.
It also draws a line between custody and software design. Firms that hold or control assets may still face stricter oversight, while those offering tools could operate with fewer restrictions.
The distinction may shape how future crypto businesses structure their products.
Policy analysts say formal rulemaking could stabilize a sector that has faced years of unclear guidance. They note that no-action letters offer limited assurance, while rules carry more legal weight.
Some observers warn that definitions will be critical. If rules are too narrow, developers may still face compliance risks. Others point to the balance regulators must strike between oversight and innovation.
There are also concerns that increased clarity could invite stricter enforcement against firms that fall outside the defined safe zone.
The CFTC is moving from case-by-case decisions toward a broader framework. That shift may influence how crypto products are built and launched in the US.
At the same time, the agency is reinforcing its authority over emerging sectors such as prediction markets. Selig said the CFTC will continue legal action against states that challenge federal jurisdiction.
Crypto regulation in the US has evolved through enforcement actions and agency guidance rather than comprehensive legislation. This has left many firms uncertain about compliance requirements.
Non-custodial wallets have been a focal point because they sit between software and financial services. Developers argue they only create tools, while regulators assess whether those tools enable regulated activity.
The Phantom case marked a turning point. By declining enforcement, the CFTC signaled that certain software models fall outside broker rules.
With formal regulations now under consideration, the agency is attempting to define boundaries that could guide the next phase of crypto development.
