Better Markets Pushes Back on CFTC Plan to Regulate Retail Crypto Trades

The US Commodity Futures Trading Commission (CFTC) has opened a public comment period on a proposed framework that would regulate certain retail crypto transactions involving margin, leverage or financing. The initiative has drawn criticism from Better Markets, which says the CFTC is not the right agency to protect everyday crypto investors. The debate comes after lawmakers failed to move forward with the CLARITY Act earlier this year. With new legislation stalled, both the CFTC and the Securities and Exchange Commission (SEC) have signaled they may rely on existing authorities to shape crypto oversight. Better Markets: CFTC lacks an investor-protection mandate Better Markets argues the CFTC's mission does not include an explicit investor-protection mandate comparable to the SEC's securities-focused authority. Benjamin Schiffrin, the nonprofit's director of securities policy, said the CFTC has historically overseen commodity and derivatives markets dominated by large institutions, with limited retail participation. Schiffrin warned that extending CFTC-style rules to crypto products sold to retail customers could dilute protections that would typically apply under securities regulation. "Unlike the SEC, the CFTC lacks an investor protection mandate," he said, adding that the CFTC is "the wrong agency to regulate transactions involving crypto assets by retail customers" because its rule set does not mirror securities-market safeguards. Dispute over legal basis and market-structure risks Better Markets also challenges the statutory rationale behind the CFTC's approach. Schiffrin said the authority the agency is relying on was originally designed to address fraud in leveraged precious-metals trading, and he disputes the idea that this history shows Congress intended the CFTC to become the primary regulator of retail crypto activity. The group also criticized aspects of the proposed framework's potential market structure. Schiffrin said it could allow affiliations among market participants that resemble relationships he argues contributed to conditions surrounding FTX's collapse. Schiffrin also took aim at CFTC Chair Mike Selig's comments about making the United States the "crypto capital" of the world, arguing the premise is unsupported and that crypto's real-world utility remains limited, used largely for speculation or criminal activity. Industry participants disputed that characterization. Nate Geraci, president of NovaDius Wealth Management, pushed back, saying the industry is primarily seeking clearer "rules of the road." He argued that if Congress cannot provide clarity, regulators such as the CFTC and SEC may need to fill the gap. CFTC proposal includes a new platform category The CFTC's filing seeks feedback on regulating retail crypto transactions involving margin, leverage or financing under existing powers. The proposal also contemplates creating a new federal category for qualifying crypto trading platforms, which would place eligible exchanges under CFTC oversight. For market participants, the classification would influence which rulebook applies, how compliance obligations are allocated and which regulator becomes the primary supervisor for certain venues. It also signals the CFTC is considering not only transaction-level conduct, but oversight of trading venues tied to these retail activities. Regulators press ahead as Congress stalls Better Markets' critique underscores a broader shift in US crypto policy: regulatory action under existing laws is increasingly driving outcomes as legislation lags. With the CLARITY Act failing to advance, the CFTC and SEC are moving on separate tracks. The SEC has continued to pursue crypto-related measures in parallel, including custody-related proposals for advisers and additional securities guidance for crypto assets. The input also references SEC efforts tied to easing certain custody rules for investment advisers, a separate move toward allowing limited tokenized US stock trading, and further guidance on how securities laws apply to crypto assets. What to watch next As the CFTC consultation progresses, attention will center on whether any final framework strengthens investor safeguards for retail participants and how it addresses relationships among market participants and eligible trading venues. With the SEC advancing its own initiatives at the same time, the comment process may shape how US crypto oversight is divided—or aligned—going forward.