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Better Markets says CFTC is ‘wrong agency’ to regulate retail crypto
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Better Markets, a nonprofit financial reform advocacy group, is warning that the Commodity Futures Trading Commission is the wrong agency to regulate retail cryptocurrency transactions. The group says the CFTC's proposed framework would leave investors with weaker safeguards than those provided under the Securities and Exchange Commission. The critique was delivered by Benjamin Schiffrin, the organization's director of securities policy. It lands as both federal market regulators press ahead with crypto policy in the absence of new legislation from Congress.
On Monday, the CFTC sought public comment on a potential framework for margined, leveraged or financed retail crypto transactions under its existing authority. The proposal also weighs a new federal category for crypto trading platforms that would bring qualifying exchanges directly under the commission's oversight. Better Markets argues the agency lacks the statutory foundation to shield small investors effectively. Schiffrin emphasized that the CFTC's mission covers commodity and derivatives markets historically dominated by large institutions with little retail participation.
"Unlike the SEC, the CFTC lacks an investor protection mandate," Schiffrin said, adding that CFTC rules do not carry the protections applying to SEC-regulated securities. The group also challenged the commission's claim that Congress intended it to oversee these transactions. Schiffrin noted that the cited statutory authority was originally enacted to address fraud in leveraged precious-metals trading. He further criticized the framework for potentially allowing affiliations between market participants that Better Markets said contributed to FTX's collapse.
Schiffrin also took aim at CFTC Chair Mike Selig's stated goal of making the United States the crypto capital of the world, likening it to cocaine production. He said that after 18 years, crypto still lacks a real-world use case and is used for speculation or criminal purposes.
Nate Geraci, president of NovaDius Wealth Management, countered that the industry simply seeks clear rules, arguing that if Congress cannot supply them, the CFTC and SEC may have to.
The SEC, meanwhile, proposed easing custody rules for investment advisers and permitted limited tokenized US stock trading.
