Better Markets Questions CFTC's Ability to Oversee Retail Crypto Trading

Better Markets, a financial regulatory advocacy group, has argued that the Commodity Futures Trading Commission (CFTC) is not the right agency to oversee retail crypto trading. The group expressed concerns that the CFTC’s proposed framework could leave investors with weaker protections than those offered under Securities and Exchange Commission (SEC) oversight.

The CFTC has sought public comment on a framework that would cover retail crypto trades involving margin, leverage, or financing. Additionally, the agency is considering a new federal category that would place qualifying crypto trading platforms under its direct oversight.

Benjamin Schiffrin, securities policy director at Better Markets, stated that the CFTC lacks a mandate for investor protection. He contended that the agency’s statutory authority, which was originally aimed at fraud in leveraged precious metals trading, does not justify its role in overseeing retail crypto markets.

Schiffrin also warned that the proposed framework could allow connections among market participants that were previously linked to the collapse of FTX. The CFTC and SEC are developing crypto policies under existing law after the CLARITY Act stalled in Congress. The SEC has proposed easing some custody rules for investment advisers and issued guidance on how securities laws apply to crypto assets.