Community Trust ScoreVerified
Better Markets didn’t hold back. The financial watchdog group came out hard against the Commodity Futures Trading Commission’s proposed framework for regulating retail cryptocurrency transactions, saying it would leave everyday investors worse off than if the Securities and Exchange Commission ran the show instead.
Why It Matters
The critique from Better Markets highlights ongoing tensions between regulatory bodies in the U.S. and raises concerns about the adequacy of investor protections in the rapidly evolving cryptocurrency landscape. As the CFTC seeks to establish its framework for retail crypto transactions, the implications of its approach could significantly influence market confidence and the regulatory environment, especially as investors increasingly seek clarity and security amidst growing volatility and risk in the crypto markets. This debate underscores the broader challenge of balancing innovation with regulatory oversight to protect consumers while fostering market development.
The CFTC opened a public comment period on the proposal, which targets margined, leveraged, or financed retail crypto transactions. Benjamin Schiffrin, director of securities policy at Better Markets, made the group’s position pretty clear: the CFTC simply doesn’t have the investor protection mandate that the SEC carries. The CFTC’s bread and butter has always been commodities and derivatives markets — spaces traditionally dominated by large institutions, not retail traders. Schiffrin’s argument is basically that putting retail crypto investors under CFTC oversight is a mismatch from the jump, because the rules the CFTC operates under don’t cover the same ground as the protections the SEC applies to securities. That’s not a small gap. That’s a structural difference with real consequences for regular people putting money into crypto markets.
And it gets more complicated.
The Statutory Authority Fight
Better Markets isn’t just arguing the CFTC is the wrong fit culturally — it’s arguing the agency may not even have the legal standing to do this. Schiffrin’s position is that Congress never intended the CFTC to regulate retail crypto transactions. The statutory authority the CFTC is leaning on? It was originally written to go after fraud in leveraged precious-metals trading. That’s a pretty narrow origin story for something the agency now wants to use as the foundation for overseeing an entire retail crypto market. Whether courts or Congress would see it the same way is unclear, but it’s the kind of legal question that tends to get messier the longer it goes unanswered.
Schiffrin also went after CFTC Chair Mike Selig directly, criticizing Selig’s stated ambition to make the US the crypto capital of the world. Schiffrin drew a controversial parallel — comparing that goal to the global cocaine trade — to question whether chasing that kind of dominance actually benefits anyone. It’s a sharp line, and probably not one that wins Schiffrin many friends in the crypto industry. But it’s the kind of pointed rhetoric Better Markets tends to use when it wants attention on a regulatory fight.
Schiffrin went further, arguing that after 18 years, cryptocurrency still lacks a real-world use case beyond speculation and illicit activities. That’s a sweeping claim. And not everyone agrees.
Industry Pushback and the FTX Shadow
Nate Geraci, president of NovaDius Wealth Management, pushed back on that framing. Per Geraci, the crypto industry isn’t asking for a free pass — it’s asking for clear regulatory guidance. His point: if Congress won’t move, then the CFTC and SEC probably need to figure it out between themselves. That’s not a radical position. It’s kind of the baseline ask from most serious crypto market participants at this point.
But the FTX collapse keeps hanging over this whole debate. Better Markets raised concerns about the CFTC’s proposed framework potentially allowing affiliations between market participants — the same kind of affiliations that contributed to FTX’s implosion. That’s a significant red flag to attach to any regulatory proposal. The argument is that if the CFTC’s framework doesn’t explicitly prohibit or tightly restrict those kinds of relationships, it could set up the next round of conflicts of interest before anyone notices. Critics of the proposal see that as a fundamental flaw, not a technical detail to be sorted out later.
It’s worth noting that the CFTC’s proposal also floats creating a new federal category for crypto trading platforms — one that would put certain exchanges directly under CFTC oversight. That’s not a minor tweak. It would reshape which exchanges answer to which regulator, and it hands the CFTC a foothold in a space the SEC has been trying to claim for years.
SEC Moves Forward on Its Own Track
While the CFTC pushes its framework, the SEC hasn’t been sitting still. The agency recently proposed easing custody rules for investment advisers, and it’s also moved to permit limited tokenized US stock trading. New guidance on how securities laws apply to crypto is in the pipeline too. Taken together, the SEC seems to be building its own regulatory architecture around digital assets, piece by piece, without waiting for a comprehensive legislative fix.
That’s the core tension here. Two agencies, both moving fast, both asserting authority over overlapping territory, and Congress hasn’t handed either of them a clear mandate. The result is a fragmented regulatory landscape where exchanges, advisers, and retail investors can’t always tell which rules apply to them or who’s actually in charge.
Better Markets wants the answer to be the SEC. The CFTC, under Selig, clearly wants it to go the other way. And without new legislation, the fight probably ends up in court at some point — or just drags on indefinitely while the market keeps growing around it.
Geraci’s broader point — that the industry needs clarity more than it needs a particular winner in the turf war — is probably right. But clarity isn’t coming fast. The public comment period on the CFTC’s proposal is still open, and Better Markets has made its comments count.
Frequently Asked Questions
What exactly is Better Markets objecting to in the CFTC’s crypto proposal?
Better Markets, through securities policy director Benjamin Schiffrin, argues the CFTC lacks the investor protection mandate the SEC has, and that the statutory authority the CFTC is citing was originally designed to address fraud in leveraged precious-metals trading — not to cover retail crypto markets.
What is the CFTC proposing to do with crypto trading platforms?
The CFTC’s proposal includes creating a new federal category for crypto trading platforms, which would place certain exchanges directly under CFTC oversight rather than the SEC’s jurisdiction.
