CFTC Pushes Toward Industry-Wide Rules for Non-Custodial Wallet Developers
The agency's move to formalize protections follows a temporary, firm-specific letter issued to Phantom in March. Developers in Nigeria, India, and other high-adoption markets stand to gain significant clarity from a permanent rule.
The U.S. Commodity Futures Trading Commission is working toward formal rulemaking that would clarify when non-custodial software developers must register as financial intermediaries under federal law. The move follows a March 17 no-action letter issued to Phantom Technologies, the Solana wallet provider, and is intended to extend similar regulatory clarity beyond a single company to the broader developer ecosystem.
Background: What the Phantom Letter Did and Did Not Do
CFTC Staff Letter No. 26-09, issued by the agency's Market Participants Division, told Phantom that staff would not recommend enforcement action against the company for failing to register as an introducing broker (IB) under the Commodity Exchange Act. That registration requirement applies to entities that solicit orders or facilitate trading in CFTC-regulated instruments, including event contracts and perpetual futures. Phantom had sought to add a feature connecting users to regulated derivatives markets and approached the CFTC in advance rather than launching first. Phantom characterized the relief as first-of-its-kind. "Rather than building first and seeking forgiveness later, we took a different approach," said Phantom CEO Brandon Millman.
The relief came with conditions. Phantom and any exchange it works with must accept joint liability for violations of the Commodity Exchange Act. The wallet must provide users with disclosures covering fees, conflicts of interest, and derivatives trading risks. Phantom must also maintain compliance policies that mirror standards set by the National Futures Association, monitor personnel for statutory disqualifications and provide prompt CFTC notification of any personnel changes, maintain records of compliance, and notify the CFTC in the event of insolvency proceedings. Critically, the platform must remain passive in order submission: it cannot generate trading signals, exercise discretion over routing, or take custody of assets. Revenue sharing with exchanges is permitted only if fully disclosed.
Despite that relief, the letter carries a significant limitation. It applies only to Phantom. Any other developer in a comparable situation must independently file their own request and obtain a separate letter. The no-action position also expires automatically once the CFTC issues a formal rule or guidance on the question. Both factors are driving the push for rulemaking.
Scale of the Platform and the Broader Market
Phantom processed roughly 850 million on-chain transactions in 2024 and handled more than 20 billion dollars in annual swap volume. The wallet holds approximately 39 percent of the active-user share among Solana wallet providers, with around 15 million monthly active users across its reported base of 20 million total users.
A Parallel Move at the SEC
The CFTC is not acting in isolation. On April 13, 2026, the SEC's Division of Trading and Markets issued its own guidance establishing a five-year temporary safe harbor, expiring in April 2031, for non-custodial interface providers, covering platforms that do not take custody, do not solicit specific transactions, use objective order routing logic, and charge fees that are not venue-specific. SEC Commissioner Hester Peirce stated that "the law is already clear that wallets and interfaces do not become 'brokers' solely because they enable users to create or control self-custody wallets." That SEC guidance tracked a joint proposal filed by a16z Crypto and the DeFi Education Fund in August 2025. The convergence of the two agencies' approaches carries additional context: Brian D. Quintenz, the nominee for CFTC chairman, previously headed policy at a16z Crypto, the same firm that co-filed the SEC safe harbor proposal.
What This Means for Developers Outside the United States
The stakes of formal rulemaking are particularly high for developers in markets where Solana-based wallets see some of their heaviest usage. Nigeria accounts for approximately 17 percent of Phantom's user base, the largest single national cohort, driven by demand for crypto as a hedge against naira devaluation and limited access to traditional banking. India represents roughly 11 percent of users; India imposes a 30 percent capital gains tax on crypto profits and a 1 percent tax deducted at source on transactions, but has not established a regulatory framework specifically addressing non-custodial software developers. Indonesia accounts for around 10 percent of users.
Developers building non-custodial products in Lagos, Nairobi, Bangalore, or Karachi face a practical problem under the current framework. The Phantom letter does not transfer to them. Filing an independent no-action request requires legal resources that most small teams in emerging markets do not have. A formal CFTC rule would provide a publicly accessible standard they could reference without having to hire U.S. counsel and petition the agency directly. Pakistan's Virtual Assets Bill, which was progressing through the legislature as of 2026, focuses on exchange licensing and does not address the status of non-custodial software developers, leaving teams there without a domestic framework to reference.
The regional regulatory picture adds further complexity. South Africa's proposed 2026 capital flow management rules would require disclosure on cross-border crypto transactions and could potentially restrict non-custodial activity. Nigeria's SEC has classified digital assets as securities with expanded custodial requirements. Kenya passed digital asset legislation in October 2025. None of these frameworks have addressed non-custodial software developers as a distinct category, leaving developers in those jurisdictions navigating both local ambiguity and potential extraterritorial exposure under U.S. law.
What Comes Next
CFTC official Michael Selig, speaking in connection with the agency's April 2026 Innovation Task Force, acknowledged that legal uncertainty for non-custodial developers has pushed activity and talent outside the United States. A formal rule distinguishing passive software providers from regulated intermediaries would replace the current patchwork of firm-specific letters with a durable, industry-wide standard. If that distinction is codified, it would likely serve as a reference point for regulators in South Asia and Africa as those markets continue to build out their own digital asset frameworks.