The US Commodity Futures Trading Commission (CFTC) has issued a no-action position expanding regulatory relief for what it describes as “passive software” providers—entities that connect users to CFTC-registered derivatives firms and exchanges without taking on the role of regulated intermediaries.

In a no-action letter released Thursday, the agency’s Market Participants Division said it would not recommend enforcement against qualifying providers or their personnel for failing to register as introducing brokers or associated persons, provided they meet specific conditions that limit discretion over users’ trading decisions. The move is expected to lower compliance friction for crypto wallets and other applications that want to link users to regulated venues, including derivatives such as perpetual contracts and prediction markets.

Key takeaways

• The CFTC’s no-action stance covers “passive software” that facilitates trading with CFTC-registered firms and exchanges without triggering introducing broker or associated person registration—if conditions are met.
• Eligibility hinges on limiting provider discretion, including restrictions on exercising judgment over users’ orders.
• The guidance builds on an earlier relief letter for Phantom Technologies’ self-custodial wallet software, extending the framework to a broader set of passive software use cases.
• The announcement arrives shortly after the CLARITY Act failed to advance in the US Senate, while CFTC and SEC leadership reiterated plans to proceed under existing regulatory authority.

What the CFTC is granting, and who it’s for

The Thursday no-action position is aimed at software providers that act as a technical bridge between end-users and regulated derivatives infrastructure. According to the CFTC, the Market Participants Division will not recommend enforcement for qualifying providers—or their personnel—if they facilitate trading with CFTC-registered entities and exchanges, but do not cross into intermediary functions that would require registration as an introducing broker or an associated person.

The crux of the relief is that the software must remain “passive.” The CFTC’s letter indicates that qualification requires conditions designed to keep the provider’s role constrained—for example, by restricting how much discretion the software provider can exert over user orders.

This distinction matters for crypto product design. Many wallets, onchain apps, and trading interfaces can be configured to route users toward regulated marketplaces. Without relief, providers may face the argument that they are effectively brokering or advising, even if they are not taking custody of assets or manually placing trades themselves.

From Phantom’s wallet software to a wider passive-software rule

The new position extends a similar approach previously granted by the CFTC. In March, the agency issued a no-action letter to Phantom Technologies covering its self-custodial crypto wallet software, subject to conditions. The earlier letter allowed Phantom—again, under defined constraints—to provide and market software that connects users with registered futures brokers and exchanges without registering as an introducing broker.

In July, Phantom and the Hyperliquid Policy Center also advocated for broader protections from the CFTC. Their request focused on shielding non-custodial wallet providers from introducing broker requirements and clarifying how existing rules apply when blockchain developers and regulated derivatives firms use onchain infrastructure. The Thursday move suggests at least part of that line of reasoning is being carried forward: the CFTC is treating certain software-mediated connections to regulated trading venues as distinct from regulated brokerage activity.

While the no-action letters are not blanket permission for every conceivable integration, the pattern is clear: regulators appear willing to carve out compliance space for interfaces that limit discretion and do not function as intermediaries in the traditional sense.

Regulatory momentum after the CLARITY Act setback

The CFTC’s decision comes just two days after the CLARITY Act failed to advance in the US Senate. A cloture motion received 49 votes—short of the 60 needed to move forward to debate, according to the reporting referenced in the original coverage.

After that vote, both CFTC Chair Michael Selig and Securities and Exchange Commission Chair Paul Atkins indicated their agencies would keep working on crypto-related regulation using existing authority. Selig said the CFTC is “locked in and ready to ship its rules for the new frontier of finance,” as referenced in a post on X. Atkins said the SEC would act “with or without legislation” to provide regulatory certainty for digital assets, also referenced via X.

Thursday’s actions reflect that stated resolve. Alongside the CFTC’s no-action position, the SEC approved a temporary exemption permitting qualifying platforms to facilitate limited onchain trading of tokenized US stocks through permissioned automated market makers and liquidity pools, according to the cited coverage.

Why this matters for crypto wallets and derivatives access

For builders and operators, the operational takeaway is that the compliance burden may be reduced when software design keeps the provider away from discretionary trading decisions. In practical terms, the CFTC’s relief signals that developers can build user-facing routing or connectivity layers—potentially including wallet functionality or other application interfaces—without automatically inheriting introducing broker registration obligations, so long as they adhere to the conditions laid out in the no-action framework.

For traders and users, the downstream effect could be smoother access to regulated derivatives-like products through familiar interfaces. If software providers can integrate with CFTC-regulated firms and exchanges more easily, users may encounter fewer friction points when seeking exposure to compliant venues—whether those venues involve perpetual derivatives or other CFTC-regulated market structures such as prediction markets.

Still, the relief is not unlimited. The CFTC’s letter makes clear that qualification depends on meeting the “passive” requirements, including limits on discretion over orders. Observers will likely watch how broadly “passive” is interpreted in future guidance and how regulators evaluate real-world products where user interaction can blur the line between simple routing and active brokerage decision-making.

Next, the industry will be looking for further clarity on how these “passive software” principles apply across different architectures—especially as more crypto applications seek integration with regulated derivatives platforms—while also monitoring whether lawmakers’ failure to move the CLARITY Act shifts the pace and direction of agency rulemaking.

Aurora Intents has added Sui as a destination for one-signature cross-chain transactions, extending access to a solver network that Aurora Labs says has routed more than $30 billion.

In a Sep. 17 press release shared with crypto.news, Aurora Labs said its Intents Connect product can now route supported assets from other blockchains directly into applications built on Sui.

Rather than leaving users with bridged funds in a Sui wallet, the system can deliver the assets into a completed position. Depending on the application, a transaction could end with the user lending an asset, entering a trade, or depositing funds into a yield product.

The company said users do not need to open a separate bridge, change wallets, or obtain SUI tokens to manage network fees. Intents Connect handles the process through the application the user already has open, while NEAR Intents provides the underlying liquidity, settlement, and connections between chains.

Aurora Intents turns transfers into completed Sui actions

Cross-chain services often focus on moving a token from one blockchain to another, leaving the user to complete the remaining steps. According to Aurora Labs, about three-quarters of the applications it speaks with need more than asset delivery because their users arrive intending to stake, lend, or trade.

Intents Connect is designed to bundle the transfer and the requested on-chain action. A user begins with an asset on a supported source chain, approves the transaction once, and receives the intended position on Sui without arranging each step separately.

For example, Aurora Labs said a Solana user depositing USDC into a Sui protocol would previously have needed to move between two wallets, bridge the funds, and buy SUI for gas. Through the new integration, the user can authorize the full process inside the Sui application with one signature.

Sui’s design required additional work because it does not use the Ethereum Virtual Machine model followed by many other chains supported by cross-chain products. Its object-based programming system, address format, and transaction structure differ from Ethereum-compatible networks.

Aurora Labs CEO Declan Hannon said Sui is only the second non-Ethereum-style blockchain supported by the service after Solana.

“We chose Sui because the engineering challenge is exactly what makes this integration meaningful,” Hannon said.

Hannon added that supporting Sui as a destination allows Intents Connect to handle its technical differences for users while giving developers access to funds held on other networks.

Sui applications gain access to external liquidity

For developers, the integration creates a route from wallets on supported chains into Sui-based products without requiring each application to build separate bridging and execution systems. Aurora Labs said one Intents Connect integration can make an application accessible to users and assets across every network supported by the service.

NEAR Intents coordinates the system through a solver network. Solvers compete to satisfy a user’s requested outcome, while the infrastructure manages liquidity and settlement across the connected blockchains.

Aurora Labs reported that the network has routed more than $30 billion to date. The company did not provide a Sui-specific volume figure or identify the first applications using the new destination support.

The added connection arrives as Sui developers build more lending products for retail and professional users. In August, crypto.news reported that NAVI Protocol had launched NAVI Prime, an on-chain lending framework made for funds and other professional market participants.

At the time, DefiLlama tracked approximately $124.6 million in total value locked across the NAVI Protocol group, including NAVI Lending, Volo LST and Volo Vault. Active loans stood at about $65.8 million, while supported lending assets included SUI, USDC, USDT, wrapped Ether and wrapped Bitcoin.

Sui’s stablecoin infrastructure has also expanded. The Sui Foundation said USDsui entered mainnet in March 2026 through Bridge’s Open Issuance platform, while the network had processed more than $111 billion in stablecoin transfers during January.

One-signature access reduces wallet steps

Wallet access remains an important part of Sui’s user experience because support differs across providers. Phantom announced in August that it would end Sui support on Sep. 24, removing Sui balances, transaction tools and application connections from its interface.

Phantom said the change would not delete or move user assets. Holders could retain access by importing their credentials into another compatible Sui wallet, though the company warned users to avoid unsolicited migration help and never disclose recovery phrases.

Intents Connect takes a different approach by allowing a user to begin from a wallet on another supported blockchain. Aurora Labs said the application manages the route into Sui, including the destination action, without asking the user to change wallets or hold SUI before starting.

The model does not remove the blockchain transactions involved in settlement. Instead, according to the company, it removes the need for the user to arrange each transaction, asset transfer, and gas payment separately.

Developer support is available immediately, with Aurora Labs publishing technical guides for applications that want to add Sui as a destination. The documentation covers transaction construction, address requirements and the steps needed to integrate Intents Connect into an application.

U.S. users already have regulated SUI exposure

For U.S. market participants, the new service adds an on-chain access route alongside products already offered through regulated and centralized platforms. Coinbase opened SUI staking access for eligible customers in July, setting a one-token minimum and estimating annual rewards of 1.4% to 3.3% at launch.

CME Group also introduced cash-settled SUI futures in May 2026, giving traders a way to gain price exposure without holding SUI in an on-chain wallet. CME offers standard contracts representing 50,000 SUI and micro contracts covering 5,000 SUI, with both settled against the CME CF Sui-Dollar Reference Rate.

A State Department official confirms to TIME that the department notified Congress that $52 million in foreign military funding for Iraq, North Macedonia, Slovakia, and Tunisia will be diverted to Colombia, Ecuador, Panama, and Peru, and that the funds will be used to “combat narcoterrorism in our own backyard and help continue to secure the Panama Canal.” The department did not specify how much military funding the U.S. will continue to provide those Middle Eastern and European nations following the shift.

The Senate’s 50-49 failure to advance the CLARITY Act has left crypto firms without a federal market structure framework and could delay product launches, funding decisions, and commercial agreements, according to three industry experts.

CLARITY Act failure leaves jurisdiction questions open

Kyle Bligen, executive director at the Decentralization Research Center, told crypto.news that the Senate result was disappointing but did not remove the need for lasting digital asset rules.

“Congress remains the best route to a comprehensive market structure framework,” Bligen said.

In the absence of federal legislation, Bligen called on the Securities and Exchange Commission and Commodity Futures Trading Commission to use their current powers to give the industry clearer guidance. He cautioned, however, against applying rules built for conventional financial middlemen directly to decentralized systems.

The policy task, according to Bligen, is to protect consumers and counter illegal activity without placing duties on developers or other participants who lack the control needed to carry them out.

“That work cannot stop because the legislative process has stalled,” he said.

The 50-49 Senate vote fell 10 votes short of the 60 required to invoke cloture and begin formal debate on H.R. 3633. Cloture would not have passed the bill into law; it would only have allowed the Senate to proceed with debate.

All participating Democrats opposed the motion, while Republican Senators Susan Collins, Josh Hawley, Jerry Moran and Thom Tillis also voted against it. Tillis changed his vote for procedural reasons, preserving an avenue for the chamber to reconsider the motion.

Disputes over government ethics, stablecoin rewards and banking provisions had continued before the vote. Democratic negotiators delivered a late counteroffer, but lawmakers did not release its complete text before the Senate acted.

The House passed its version of the CLARITY Act in July 2025 by a 294-134 vote, with 78 Democrats supporting the measure. Republicans hold 53 Senate seats, which meant the bill’s supporters needed votes from at least seven Democrats to clear the procedural threshold.

In July, Treasury Secretary Scott Bessent had pressed for a vote after months of negotiations among lawmakers. Polymarket traders assigned the bill a roughly 30% chance of becoming law in 2026 at the time, down from 82% in February. Following the failed cloture motion, the probability dropped to 7% from 31% a day earlier.

Regulatory uncertainty could delay crypto products

Matt Price, head of global partnerships at stablecoin platform WasabiCard, said the vote had left companies with the same classification and jurisdiction questions they faced before the Senate acted.

“The failure to advance CLARITY leaves the industry with the same basic problem it had before the vote,” Price said. “Firms still do not have a clear answer on how some digital asset products will be classified or which rules apply.”

Without a settled division of authority, Price expects companies to spend more time seeking legal advice before putting capital into products. Some firms may hold a launch or commercial agreement because they do not want a regulator to adopt a different view after the product enters the market, he added.

Questions over whether the SEC or CFTC has jurisdiction may also affect funding choices and negotiations between crypto companies, according to Price. He expects some partnerships and releases to be postponed for that reason.

Banks and payment companies could exercise similar caution, Price said, because they need to understand the compliance duties attached to a digital asset project and whether regulators could change the applicable requirements after launch.

“This could slow innovation and adoption in the marketplace,” he said.

The failed vote has also increased pressure on federal regulators. Former CFTC Chair Chris Giancarlo said the SEC and CFTC could continue building rules under their existing mandates, according to a Sep. 16 report.

Coinbase CEO Brian Armstrong made a similar call after the vote, saying the industry could no longer wait for Congress and urging both agencies to use the tools already available to them. Ripple CEO Brad Garlinghouse also asked the regulators to fill the legislative gap.

Agency action cannot resolve every issue covered by the bill. In particular, SEC rules alone cannot establish a statutory split of authority between the SEC and CFTC, according to the Sep. 16 report.

H.R. 3633 remains on the Senate calendar, and Tillis’ procedural vote permits another cloture attempt. Sen. John Kennedy said the measure could return during a lame-duck session after the November elections, while Sen. Ted Cruz described it as “mostly dead.”

Any changes approved by the Senate would still need further House action before the legislation could reach the president. A shortened House calendar has reduced the number of voting days available before lawmakers leave Washington.

Foreign stablecoin rules pose a separate compliance test

Konstantins Vasilenko, co-founder and chief business development officer at MiCA-licensed crypto exchange Paybis, said regulatory uncertainty also extends to stablecoin businesses operating between the United States and Europe.

According to Vasilenko, US authorities are determining how domestic stablecoin requirements will apply to foreign issuers, while European policymakers are considering how to treat oversight conducted outside the European Union.

Under the EU’s Markets in Crypto-Assets regulation, an issuer must show that it holds authorization, manages its reserves and can honor redemption requests, Vasilenko said. The US Treasury’s lawful-order test asks a different question: whether a foreign issuer can execute an American order to freeze assets.

“How far a platform must go to satisfy that check remains open,” he said.

Treasury has raised questions about smart contracts and functions including “freeze,” “seize,” and “burn,” according to Vasilenko. A compliance review can establish whether an issuer has the technical ability and internal process to respond to a lawful order, but it cannot guarantee how the company will respond in every future case, he added.

Vasilenko called on Treasury to state what evidence would satisfy its review. Clear standards would help exchanges and wallet providers assess foreign stablecoins before making them available to customers subject to US rules, according to his comments.

Europe is separately considering how much reliance its regulators can place on supervision performed in another jurisdiction. Vasilenko said mutual recognition should be assessed one requirement at a time rather than granted through a single all-purpose decision.

Where US and EU authorities ask the same compliance question, one answer should be sufficient, he said. When the requirements differ, as they do over the ability to follow a US lawful order, Vasilenko said platforms and issuers would need to complete both checks.

Cryptocurrency adoption is advancing in Germany, particularly among younger investors, while the UK is gradually falling behind, largely due to lagging regulations, according to CoinShares crypto researcher Luke Nolan.

German cryptocurrency adoption is showing “very good progress” through “family offices, wealth managers, individual advisors” and younger generations looking to invest inherited wealth in digital assets, Nolan told Cointelegraph on the Chain Reaction show on Thursday.

In contrast, the UK is “still very much behind,” said Nolan, adding that the country’s Financial Conduct Authority (FCA) only lifted its ban on crypto exchange-traded products less than a year ago, making its digital asset market “nascent.” The regulator previously banned these products from retail participants in January 2021.

Germany has 89 licensed crypto-asset service providers, accounting for 25.5% of companies in the European Securities and Markets Authority’s (ESMA) Markets in Crypto Assets (MiCA) register, updated on Wednesday. The EU’s biggest economy was also the bloc’s leader by MiCA authorization in June, with 57 authorized crypto companies. 

Source: Cointelegraph

Leading German banks are venturing into crypto

The adoption trend is not lost on the largest German banks.

The country’s biggest, Deutsche Bank, revealed on Wednesday that it was awaiting regulatory approval to launch crypto custody solutions for institutional clients in Europe, with a license expected in October.

In April 2024, Germany’s largest federal bank, the Landesbank Baden-Württemberg, started offering crypto custody solutions after partnering with the Austria-based Bitpanda for its institutional custody platform. 

Related: Bernstein expects ‘aggressive’ rulemaking from SEC, CFTC, following CLARITY Act failure

Meanwhile in the UK, the FCA on Wednesday issued final guidance outlining when crypto activities may require authorization under the country’s incoming regulatory regime.

The regulator will open licensing applications on Sept. 30, with a Feb. 28, 2027 deadline for firms seeking transitional arrangements ahead of the new regime taking effect on Oct. 25, 2027.  

On Thursday, the FCA announced that it sent a cease-and-desist letter to three London locations suspected of facilitating illegal peer-to-peer crypto trading.

The UK Parliament approved regulations bringing digital assets within the FCA’s regulatory remit in February and finalized a package of rules and guidance in June.

Magazine: How the EU’s crypto tax rules are expected to work for users and platforms

South Korean police have reportedly referred 18 Polymarket users to prosecutors as part of an illegal gambling investigation that involves 26 suspects and roughly 17.6 billion won (about $12.7 million) in wagers. The case is based on analysis of on-chain activity, according to a report citing data submitted by the National Police Agency.

Authorities say they identified participants by examining publicly available blockchain transactions tied to Polymarket, despite the platform operating without a conventional, real-name user registry. Suspects are accused of placing stakes on event outcomes that—under South Korean legal interpretation—amount to gambling.

Key takeaways

• South Korea’s police have referred 18 Polymarket users to prosecutors, based on an investigation covering 26 people and about 17.6 billion won in wagers.
• Investigators reportedly used publicly available blockchain transaction data to connect individuals to activity on the platform.
• Authorities argue Polymarket transactions fall under South Korea’s Criminal Act as illegal gambling, while users have framed the activity as crypto-based derivatives investment.
• Earlier actions included a June probe and an Aug. 18 decision to block Polymarket after a regulator found the platform’s structure fostered speculative gambling.
• The legal dispute hinges on how “uncertainty” and the structure of trading contracts are characterized under domestic law—especially given Polymarket’s noncustodial, smart-contract design.

How the investigation built from on-chain activity

According to Asia Economy, data provided to Democratic Party lawmaker Yoon Kun-young by the National Police Agency shows that the Gangwon Provincial Police Agency had 26 people under investigation as of Tuesday and had forwarded 18 of them to prosecutors. Asia Economy also reported that the largest wager attributed to a single user was about 5.7 billion won (roughly $4.1 million).

The report says police identified the suspects by analyzing publicly available blockchain transactions. That matters because Polymarket is described as operating on a noncustodial, peer-to-peer model with automated settlement, meaning it does not keep a traditional list of users linked to real-world identities. In other words, the investigation appears to rely on the traceability of transaction patterns rather than on account records maintained by the platform.

Polymarket’s basic premise is that participants can buy and sell contracts tied to real-world event outcomes. When those outcomes resolve, settlement is handled through smart contracts. Asia Economy’s account indicates that investigators nonetheless concluded these contract positions are functionally equivalent to wagering under local law.

The legal argument: gambling vs. derivatives

Authorities reportedly argued that Polymarket transactions constitute illegal gambling under South Korea’s Criminal Act. The basis of that classification, as described in the report, is that users stake assets on outcomes that cannot be predicted with certainty.

Users, however, pushed back. Asia Economy reports that suspects argued Polymarket should be treated as a crypto-based derivatives investment market instead of gambling. That framing reflects a common approach taken by prediction-market operators: trading event-linked contracts can resemble derivatives activity, including the ability to enter and exit positions before a contract settles.

Tae-Lim Kim, a managing attorney at AXIS Law, told Asia Economy that the transactions could meet the legal requirements for gambling. He also said that describing the activity strictly as prediction derivatives may be difficult as a defense in criminal proceedings. At the same time, he suggested that the ability to trade contracts and close positions before settlement could still become relevant for how a court evaluates the overall nature of the activity.

Regulatory pressure escalated before the referrals

The development comes after a visible escalation of South Korean enforcement against Polymarket. In June, Gangwon police launched what was described as South Korea’s first illegal gambling probe into local Polymarket users, acting at the request of the National Police Agency. Earlier coverage from Cointelegraph noted that the case began as an illegal gambling inquiry.

Then, on Aug. 18, South Korean authorities reportedly moved to block Polymarket after determining it provided an illegal gambling environment for users in the country. Cointelegraph previously reported that the blocking decision followed concerns over whether prediction-market activity was being regulated under existing gambling frameworks.

The report also cites the Korea media and communications review commission’s reasoning: it said the platform’s winner-takes-all structure encourages speculative gambling. The commission pointed to Polymarket’s role in operating the markets and setting trading rules, along with the platform’s handling of crypto deposits, withdrawals, settlement, and transaction fees.

Polymarket’s response, as summarized in the report, was that it does not provide Korean-language services or support payments in Korean won. The platform also argued that because transactions are noncustodial and executed via smart contracts, it does not directly manage users’ funds. The regulator rejected the argument, stating that technical design characteristics do not exempt a service from South Korean law.

What this means for users and for prediction markets in South Korea

For market participants, the referral of 18 users to prosecutors signals that enforcement is no longer limited to investigation or takedown efforts—it has moved into the formal legal process. The reported use of blockchain transaction analysis suggests that authorities may be able to map participants even when a platform does not maintain a direct, real-name customer list.

For prediction-market platforms and other “derivatives-like” crypto products, the dispute highlights a structural tension: even if a service is technically noncustodial and settlement is automated, regulators may still assess whether the activity resembles gambling based on how users stake value on uncertain outcomes and how profit is distributed (including whether trading resembles speculation rather than hedging).

Readers should watch whether prosecutors expand the case beyond the initial group of 26 and how courts interpret the defense arguments around derivatives characterization, particularly the practical ability to trade and exit positions before settlement.