CFTC Wants Crypto's Keys, But Better Markets Says They're Holding the Wrong Loot 🗝️

The Commodity Futures Trading Commission on Monday published an advance notice of proposed rulemaking seeking public comment on a framework for margined, leveraged or financed retail crypto transactions, a move that drew immediate pushback from the nonprofit financial reform group Better Markets. Benjamin Schiffrin, director of securities policy at Better Markets, argued the CFTC is the wrong agency to police retail crypto activity. "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," Schiffrin said. "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.

Better Markets also challenged the CFTC's reading of its own statutory authority, with Schiffrin noting that the provision cited was originally enacted to address fraud in leveraged precious-metals trading and does not signal congressional intent for the agency to become a primary retail crypto regulator. The group further criticized the framework under consideration for potentially allowing affiliations between market participants that Better Markets said contributed to the collapse of FTX. Schiffrin also took issue with CFTC Chair Mike Selig's stated goal of making the United States the "crypto capital of the world." "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," Schiffrin added.

Nate Geraci, president of NovaDius Wealth Management, pushed back on that characterization, saying the crypto industry is seeking clear rules of the road and that, if Congress cannot provide them, the CFTC and SEC may have to act. The CFTC's notice opens a 60-day public comment period once it is published in the Federal Register and also considers creating a new federal category for crypto trading platforms that would bring qualifying exchanges directly under CFTC oversight. Selig said the rules are designed to prevent fraud like FTX rather than prosecute it afterward, and the notice disowns the agency's own Biden-era cases against Kraken, Ooki DAO, and Uniswap as regulation by enforcement. The action comes three weeks after the CLARITY Act, which would have established the ground rules for most cryptocurrency activity in the United States, fell short in the Senate, and both the CFTC and the SEC have signaled they are prepared to act under existing law without new legislation.