Better Markets Challenges CFTC’s Role in Regulating Retail Crypto

The Commodity Futures Trading Commission (CFTC) is facing criticism from Better Markets, a nonprofit financial reform advocacy group, over its push to regulate retail crypto transactions. The CFTC sought public comment on a potential framework for margined, leveraged, or financed retail crypto transactions under its existing authority. However, Benjamin Schiffrin, director of securities policy at Better Markets, argues that the CFTC is not the right agency for this role, as it lacks an investor protection mandate compared to the Securities and Exchange Commission (SEC).

Schiffrin highlighted that the CFTC’s mission is to regulate commodity and derivatives markets, which have historically been dominated by large institutions rather than retail investors. He warned that the CFTC’s rules do not offer the same protections as those under the SEC’s oversight, potentially leaving retail investors with weaker safeguards. Better Markets also questioned the CFTC’s claim that Congress intended the agency to oversee retail crypto transactions, arguing that the statutory authority cited by the CFTC was originally meant to address fraud in leveraged precious-metals trading.

The criticism comes as the CFTC and SEC move ahead with crypto policy under existing law after the CLARITY Act stalled in Congress. The CFTC’s proposed framework also considers a new federal category for crypto trading platforms that would bring qualifying exchanges directly under its oversight. Meanwhile, the SEC has also advanced several crypto measures, including easing some custody rules for investment advisers and allowing limited tokenized US stock trading.

Nate Geraci, president of NovaDius Wealth Management, pushed back against Better Markets’ characterization, stating that the crypto industry is simply seeking clear rules of the road. He argued that if Congress cannot provide them, the CFTC and SEC may have to step in. Better Markets also criticized CFTC Chair Mike Selig’s statements about making the US the crypto capital of the world, with Schiffrin questioning the benefits of such a goal.