Phantom Receives CFTC's First Exemptive Letter, Confirming Non-Custodial Crypto Wallets Do Not Need to Register as Brokers

Phantom CEO Brandon Millman announced on LinkedIn that the company has received its first No-Action Letter from the U.S. Commodity Futures Trading Commission (CFTC), allowing Phantom to connect crypto wallet users to regulated derivatives markets and event contracts without registering as an intermediary broker.

CFTC Confirms Phantom as Software Provider

According to the letter issued by the CFTC, Phantom is classified as a technology platform providing non-custodial interfaces. The exemption states that when Phantom connects users to regulated exchanges and Designated Contract Markets (DCMs), as long as it does not handle customer funds and orders are directly submitted by users to the exchange, it is not legally considered an intermediary broker. This new enforcement framework separates software providers from traditional financial intermediaries, recognizing that non-custodial wallets inherently do not fit into existing broker registration systems, providing a legal basis for non-custodial wallet services to enter compliant financial markets.

Phantom CEO Brandon Millman emphasized that “self-custody” is the most advantageous core value in the cryptocurrency space. Since Phantom does not handle customer funds but allows users to submit orders directly to exchanges, this model has been recognized by the CFTC as not fully subject to traditional broker registration requirements.

Millman stated that Phantom’s long-term goal is to develop products that are both secure and user-friendly, and “building a clear and compliant framework” is key to achieving this. As the CEO of an American company, he looks forward to the U.S. transforming into the best global startup hub, and he is honored by the support from the CFTC.

Additionally, Millman expressed gratitude on LinkedIn to the CFTC and Chairman Michael Selig. He hopes this exemption can set a precedent for the industry and help establish a long-term regulatory framework that benefits the entire blockchain ecosystem.

Future Crypto Software Providers May Follow Phantom’s Model to Obtain Exemptions

Phantom is the first company to receive an exemption from the U.S. CFTC specifically for “self-custodial wallet software providers,” marking a significant milestone for U.S. financial regulation. According to official statements, the CFTC explicitly indicated in the letter that it is working on formal rules or guidelines to replace such individual exemptions in the future.

Phantom’s CEO said that engaging in substantive and transparent dialogue with regulators helps resolve conflicts between emerging technologies and traditional laws. The company hopes that this cooperation will serve as a model beyond a single enterprise, promoting the development of a long-term regulatory framework that balances technological innovation with social responsibility.

This article about Phantom receiving the CFTC’s first exemption confirming that non-custodial crypto wallets do not need to register as brokers first appeared on Chain News ABMedia.