Better Markets Says CFTC Is the Wrong Agency to Oversee Retail Crypto

Better Markets says the CFTC’s push to write rules for certain retail crypto transactions could leave investors with weaker protections. On Monday, the Commodity Futures Trading Commission asked for public comment on a framework covering margined, leveraged or financed retail crypto deals under its existing authority. Benjamin Schiffrin, director of securities policy at the nonprofit, argued that the CFTC has no investor protection mandate like the SEC. Its markets, he said, have mostly been dominated by large institutions with little retail participation. He concluded that the CFTC is the wrong agency to regulate retail crypto transactions.

Questions Over CFTC Authority and the “Crypto Capital” Goal

Schiffrin also disputed that Congress meant the CFTC to oversee these transactions. He said the cited authority was first written to tackle fraud in leveraged precious-metals trading. He warned the framework could allow affiliations between market participants that Better Markets says contributed to FTX’s collapse. He also questioned CFTC Chair Mike Selig’s aim of making the US the crypto capital of the world, saying crypto still lacks a real-world use case beyond speculation or crime. Nate Geraci of NovaDius Wealth Management pushed back, saying the industry wants clear rules and that the CFTC and SEC may need to act if Congress cannot.

CFTC and SEC Act After CLARITY Act Stalls

The proposal also considers a new federal category for crypto trading platforms under CFTC oversight. The SEC has moved too, proposing easier custody rules for investment advisers, allowing limited tokenized US stock trading and issuing new guidance on how securities laws apply to crypto. Both agencies are acting under existing law after the CLARITY Act stalled in Congress.