Phantom can now partner with registered exchanges without registering as an introducing broker, setting a template for compliant innovation in crypto.
Phantom Secures CFTC No-Action Relief for Access to Regulated Derivatives and Event Contracts
We’re pleased to share that the CFTC has confirmed through no-action relief that Phantom does not need to register as an introducing broker to offer users access to regulated markets directly in the Phantom app, in partnership with CFTC registered partners. It's an important milestone and one we're proud to have pursued with the CFTC.
What the letter says
As a software provider, Phantom can now act as a non-custodial interface connecting users to a registered exchange, such as a Designated Contract Market (DCM), without taking on the regulatory obligations of an introducing broker. The letter contains a number of conditions designed to ensure that the CFTC's policy priorities are met and users are protected. Under this model users can submit orders directly to a registered exchange. Phantom never touches customer funds. This applies specifically to a custodial model with a registered exchange partner. It does not cover DeFi derivatives or tokenized prediction markets.
Our approach
The process that led to Phantom's no action relief is how the regulatory process should work. With thanks to the CFTC's willingness to open their doors to facilitate innovation, we proactively engaged with the CFTC to seek clarity on how a non-custodial interface like Phantom could offer access to regulated markets through a registered partner, without acting as an intermediary that needs its own registration. Rather than building first and seeking forgiveness later, we took a different approach to give our users safe and reliable ways to access traditional financial markets. This letter is the result of that process.
Why it matters beyond Phantom
This is first-of-its-kind relief for this specific model. The CFTC letter acknowledges their focus on developing rulemaking or guidance that may supersede the letter in the future, and we hope that our engagement can help shape a long-lasting framework that benefits the industry as a whole.
We also want to acknowledge the CFTC for engaging with us seriously and in good faith. Working through genuinely novel legal questions takes effort on both sides, and this outcome reflects a willingness to do that work rather than default to no.
Phantom was built on the belief that crypto should be safe and easy to use. We're committed to continuing to lead the way on developing products that are innovative, compliant, and put the user first.
"A critical part of making crypto safe and easy to use is building financial products that are governed by clear, common-sense regulations. When warranted, engaging regulators early to find compliant pathways for these new products produces better outcomes for our users, for the industry, and for regulators themselves. This letter is proof of that. We're grateful to the CFTC for working through a genuinely novel question with us, and we look forward to bringing more innovative products to consumers in a way that gives them confidence and sets the right precedent." — Brandon Millman, CEO