Author: Phantom

Compiled by: Deep Tide TechFlow

Deep Tide Editorial: Phantom has received a far-reaching exemption letter from the CFTC — allowing crypto wallets to directly connect users to compliant derivatives and event contract exchanges without registering as "introducing brokers."

This is the first example of its kind globally, and Phantom's approach itself is also noteworthy:

Proactive communication with regulators, compliance first and then launch, rather than building first and seeking forgiveness — this pathway may become a new model for the crypto industry to engage with regulators.

The full text is as follows:

We are pleased to announce that the CFTC has confirmed through a no-action relief letter: Phantom, in collaboration with CFTC-registered partners, is now able to provide users direct access to regulated markets within the Phantom app without registering as an introducing broker.

This is an important milestone and a result we are proud to advance together with the CFTC.

Contents of the exemption letter

As a software provider, Phantom can now serve as a non-custodial interface, connecting users to registered exchanges (such as designated contract markets, DCMs), without assuming the regulatory obligations of introducing brokers.

The letter includes several conditions aimed at ensuring the implementation of CFTC's policy priorities while protecting user rights.

Under this model, users can submit orders directly to registered exchanges, and Phantom will never touch customer funds. This provision specifically applies to custody models with registered exchange partners and does not cover DeFi derivatives or tokenized prediction markets.

Our approach

The process that facilitated Phantom's receipt of this exemption letter is how the regulatory process should work.

Thanks to the CFTC for being open to supporting innovation, we proactively communicated with the CFTC to seek clear guidance on how to provide users with access to regulated markets through registered partners in a non-custodial manner without self-registering as an intermediary.

We did not choose to build first and seek forgiveness later; instead, we took a different path to provide users with a safe and reliable way to access traditional financial markets. This letter is the outcome of that process.

Significance beyond Phantom

This is the first global exemption of its kind for this specific model. The CFTC's letter acknowledges their commitment to developing rules or guidelines that may replace this letter in the future, and we hope our participation can help form a lasting framework beneficial to the entire industry.

We also want to thank the CFTC for their serious and honest collaboration with us. Addressing truly groundbreaking legal issues requires effort from both sides, and this result reflects both parties' willingness to do the work rather than defaulting to refusal.

Phantom was founded on the belief that crypto should be safe and easy to use. We are committed to continuously leading the development of innovative, compliant, and user-centric products.

"The key to making crypto safe and easy to use is to create financial products governed by clear and reasonable regulation. Engaging with regulators early and seeking compliant paths when necessary will yield better outcomes for users, the industry, and the regulators themselves. This letter is proof of that.

We appreciate the CFTC for addressing this truly groundbreaking issue with us and look forward to launching more innovative products for consumers in ways that empower user confidence and set the right precedents."

——Brandon Millman, CEO