CFTC Plans to Formalize Protection for Non-Custodial Software Developers

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On May 6, Michael Selig, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), announced at the Consensus Miami conference that the agency is planning to convert its friendly stance towards non-custodial software developers into formal rules. In March, the CFTC had already issued a no-action letter to cryptocurrency wallet provider Phantom, clarifying that self-custody wallet software developers meeting certain conditions do not need to register as brokers. Compared to temporary guidance, the CFTC prefers to quickly establish regulatory positions through formal rules to provide clear guidance for U.S. developers, thereby promoting the development and launch of related software. This move aligns with similar guidance issued by the SEC last month, which indicated that interfaces like DeFi wallets are generally not considered brokers. Both regulatory agencies are currently working to clarify their regulatory stance towards software developers, which is beneficial for the growth of non-custodial wallets and DeFi tools in the U.S.

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