Better Markets Faults CFTC's Proposed Rules for Retail Crypto Trading

Better Markets, a nonprofit financial reform advocacy group, is taking aim at the CFTC's proposed framework for retail crypto trading, arguing it would provide weaker investor safeguards than the SEC. The CFTC on Monday opened a public comment period on a proposal covering retail crypto transactions that involve margin, leverage, or other forms of financing. Benjamin Schiffrin, Better Markets' head of securities policy, said the CFTC does not have the same statutory investor-protection mandate as the SEC. He argued the CFTC's core remit has historically been commodity and derivatives markets dominated by large institutional participants with limited retail involvement, making it ill-suited to serve as the primary overseer of retail crypto trading. Better Markets also disputed the CFTC's assertion that Congress intended the agency to regulate these activities. Schiffrin said the legal authority cited by the CFTC was originally designed to combat fraud in leveraged precious-metals trading and does not signal congressional intent for the CFTC to become the main regulator of retail crypto. Schiffrin further warned that the proposed framework could allow certain relationships among market participants that mirrored dynamics that contributed to the collapse of FTX. He also criticized remarks by CFTC Chair Mike Selig about making the U.S. the world's crypto capital, saying Selig did not explain why that goal would benefit the country and noting that, even after 18 years, crypto still lacks legitimate use cases. Nate Geraci, president of NovaDius Wealth Management, pushed back, saying the industry is primarily seeking clear rules. If Congress does not provide them, he argued, the CFTC and SEC may have little choice but to step in and shoulder the responsibility.