- Better Markets argues the CFTC lacks the investor protection mandate of the SEC and is the wrong agency for retail crypto oversight.
- The group questioned the CFTC’s statutory authority for the crypto framework and warned its rules could permit risky affiliations akin to FTX.
- Better Markets challenged the goal of making the US the “crypto capital,” claiming the industry lacks real-world utility beyond speculation.
- The CFTC and SEC are advancing crypto rulemaking under existing law after the CLARITY Act stalled in Congress.
The nonprofit financial reform group Better Markets pushed back against the Commodity Futures Trading Commission‘s (CFTC) move to regulate retail crypto transactions, arguing the derivatives regulator is ill-equipped to protect smaller investors. The CFTC sought public comment on a framework for margined and leveraged retail crypto trades under its existing authority.
Consequently, Benjamin Schiffrin, director of securities policy at Better Markets, argued that the CFTC lacks the investor protection mandate of the SEC, as its mission primarily targets large institutions. “Unlike the SEC, the CFTC lacks an investor protection mandate,” said Schiffrin, adding that the agency is the wrong regulator for retail crypto assets.
The group also challenged the statutory authority the CFTC cited, claiming it was originally crafted to address fraud in leveraged precious-metals trading. Better Markets further warned that the framework’s allowance for certain affiliations could lead to risks similar to those that contributed to the collapse of FTX.
Meanwhile, Better Markets took aim at CFTC Chair Mike Selig’s statements about making the US the “crypto capital of the world.” “The US is not the cocaine production capital of the world, and no one is complaining—for good reason,” Schiffrin said, arguing that crypto lacks a real-world use case beyond speculation or criminal activity.
However, NovaDius Wealth Management President Nate Geraci pushed back on the characterization. He stated the crypto industry simply seeks clear rules of the road and that regulators must step in if Congress cannot provide them.
The CFTC’s crypto framework considers a new federal category for trading platforms, bringing them directly under its oversight. This regulatory push comes as both the CFTC and SEC advance crypto policy without new legislation following the stalled CLARITY Act.
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