Better Markets Challenges CFTC as Wrong Regulator for Retail Crypto

Better Markets, a nonprofit financial reform advocacy group, has criticized the Commodity Futures Trading Commission (CFTC) as the wrong agency to oversee retail cryptocurrency transactions. The group argues that a proposed framework for margined and leveraged crypto trading would weaken investor protections compared to those under the Securities and Exchange Commission (SEC). On October 5, the CFTC sought public comment on a potential framework to bring certain retail crypto transactions under its existing authority.

Benjamin Schiffrin, director of securities policy at Better Markets, argues that the CFTC’s mission centers on commodity and derivatives markets, historically dominated by large institutions, not retail participants. He contends that the CFTC operates without the investor protection mandate that governs the SEC. The SEC’s framework includes disclosure requirements and suitability standards designed for retail investors, which are absent in the CFTC’s rules.

Schiffrin also challenged the CFTC’s statutory authority, noting it was originally enacted to address fraud in leveraged precious-metals trading and does not reflect congressional intent for the agency to become a primary regulator of retail crypto. He further criticized the framework for potentially allowing affiliations between market participants, citing the collapse of FTX as an example of such risks.

The criticism comes as the CLARITY Act, which aimed to clarify regulatory jurisdiction over crypto, stalled in Congress. Schiffrin questioned CFTC Chair Mike Selig’s ambition to make the U.S. the crypto capital of the world, arguing that crypto lacks real-world use cases beyond speculation or criminal purposes. Nate Geraci, president of NovaDius Wealth Management, countered that the crypto industry seeks clear rules and that regulators may need to act in the interim.

Both the CFTC and SEC are moving forward with regulatory actions under existing laws. The SEC recently proposed easing some custody rules for investment advisers and allowed limited tokenized US stock trading under a temporary exemption. The next significant inflection point may be the 2026 midterm elections, which could reset congressional appetite for comprehensive crypto legislation.