Author: Phantom
Compiled by: Deep Tide TechFlow
Deep Tide TechFlow Introduction: Phantom has obtained a profoundly significant exemption letter from the CFTC—crypto wallets no longer need to register as "introducing brokers" to directly connect users with compliant derivatives and event contract exchanges.
This is the world's first case of this model, and Phantom's approach itself is noteworthy:
Proactively engaging with regulators, ensuring compliance before launch, rather than building first and seeking forgiveness later—this approach may set a new precedent for the crypto industry's interactions with regulatory agencies.
Full Text Below:
We are thrilled to announce that the CFTC has confirmed via a no-action relief letter: Phantom, in collaboration with CFTC-registered partners, can directly provide users with access to regulated markets within the Phantom application without registering as an introducing broker.
This is a significant milestone and an achievement we are honored to have advanced together with the CFTC.
Content of the Exemption Letter
As a software provider, Phantom can now serve as a non-custodial interface to connect users to registered exchanges (e.g., Designated Contract Markets, DCMs) without assuming the regulatory obligations of an introducing broker.
The letter includes several conditions designed to ensure the CFTC's policy priorities are met while protecting user rights.
Under this model, users can submit orders directly to registered exchanges, with Phantom never handling customer funds. This provision specifically applies to custodial models with registered exchange partners and does not cover DeFi derivatives or tokenized prediction markets.
Our Approach
The entire process that led to Phantom securing this exemption letter exemplifies how regulatory procedures should ideally function.
We are grateful to the CFTC for keeping its doors open to support progress. We proactively engaged with the CFTC to seek clear guidance on how to provide users with access to regulated markets through registered partners as a non-custodial interface without having to register as an intermediary ourselves.
Instead of choosing to build first and seek forgiveness later, we took a different path to provide users with a safe and reliable way to access traditional financial markets. This letter is the result of that process.
Implications Beyond Phantom
This is the world's first exemption of its kind for this specific model. The CFTC's letter acknowledges that they are working on rules or guidance that may replace this letter in the future. We hope our involvement will contribute to forming a lasting framework that benefits the entire industry.
We also extend our thanks to the CFTC for collaborating with us seriously and in good faith. Addressing truly groundbreaking legal issues requires effort from both sides, and this outcome reflects a mutual willingness to do the work rather than defaulting to rejection.
Phantom was founded on the belief that crypto should be safe and easy to use. We are committed to continuing to lead the development of innovative, compliant, and user-first products.
"The key to making crypto safe and easy to use lies in creating financial products governed by clear, reasonable regulations. Engaging with regulators early and finding compliant pathways, when necessary, leads to better outcomes for users, the industry, and regulators themselves. This letter is proof of that.
We appreciate the CFTC's collaboration in addressing this truly groundbreaking issue and look forward to launching more innovative products in a way that instills user confidence and sets the right precedents."
—Brandon Millman, CEO
