Public advocacy group Better Markets contended that a proposed CFTC regulatory framework intended to oversee specific digital asset transactions and exchanges will leave investors with weaker safeguards than the protections enforced by the SEC.
Advocacy group Better Markets asserted that ongoing efforts by the American derivatives regulator to craft regulations for specific retail crypto transactions risk leaving consumers with reduced legal protections, contending that the commission lacks proper preparation to monitor the sector effectively.
On Monday, the Commodity Futures Trading Commission solicited public input concerning a prospective regulatory blueprint for margined, leveraged, or financed retail digital asset trades under its current mandate. Benjamin Schiffrin, who directs securities policy at the financial reform nonprofit Better Markets, contended that CFTC supervision offers inferior retail investor protection compared to SEC oversight.
“Unlike the SEC, the CFTC lacks an investor protection mandate. Its mission is to regulate the commodity and derivatives markets, which historically have been dominated by large institutions with very little retail investor participation,” said Schiffrin.
“Because the CFTC’s rules lack the protections that apply when investors trade securities regulated by the SEC, the CFTC is the wrong agency to regulate transactions involving crypto assets by retail customers,” he added.
Critique from Better Markets emerged as both the CFTC and SEC pressed forward with digital asset regulation using current statutes following the legislative stall of the CLARITY Act in Congress. Previously, both regulatory bodies indicated their readiness to take independent action absent fresh legislation.
Better Markets Challenges the “Crypto Capital” Goal
Better Markets also disputed the CFTC’s assertion that lawmakers intended for the commission to supervise these categories of retail crypto trading.
Schiffrin pointed out that the legal power invoked by the commission originally targeted fraud within leveraged precious-metals markets, arguing that this history failed to demonstrate congressional intent for the agency to serve as a principal supervisor for retail digital assets.
He further condemned the proposed regulatory model for potentially permitting industry ties between market players—connections that Better Markets claimed directly fueled the downfall of FTX.
Schiffrin additionally targeted recent remarks from CFTC Chair Mike Selig regarding goals to turn America into the global epicenter for cryptocurrency.
“Yet he does not explain why that is a good thing. For example, the US is not the cocaine production capital of the world, and no one is complaining—for good reason,” he said.
“Crypto—after 18 years of effort and innumerable disproved and baseless claims—still lacks any real-world use case. It is used either purely for speculation or for criminal purposes,” he said.
NovaDius Wealth Management President Nate Geraci pushed back against that framing, stating that the digital asset sector simply wants transparent operating guidelines, and arguing that if lawmakers fail to deliver them, the CFTC and SEC might have to step in.
CFTC, SEC Advance Crypto Plans After CLARITY Setback
Under the CFTC’s newly suggested digital asset framework, a fresh federal designation for crypto trading platforms is being considered, which would place qualifying exchanges directly under the regulatory commission’s supervision.
Simultaneously, the SEC advanced various digital asset initiatives. On Thursday, relaxed custody guidelines for investment advisers were proposed, alongside permissions for restricted tokenized American stock trading and fresh regulatory advice concerning the application of securities laws to cryptocurrency.
