The US Commodity Futures Trading Commission has opened a public comment process on a proposed framework aimed at regulating certain retail crypto transactions that involve margin, leverage, or financing. The move has drawn a sharp response from Better Markets, which argues that the CFTC is the wrong regulator for protecting everyday investors in crypto.
Earlier this year, lawmakers failed to advance the CLARITY Act, prompting both the CFTC and the Securities and Exchange Commission to signal they may move forward under existing authorities rather than wait for new legislation. Against that backdrop, Better Markets says the CFTC’s approach risks leaving retail users with weaker safeguards than those that apply to securities markets.
Key takeaways
- Better Markets says the CFTC’s regulatory mission lacks an explicit investor-protection mandate comparable to the SEC’s securities-focused authority.
- The CFTC is seeking public comment on a framework that would cover certain margined, leveraged, or financed retail crypto transactions under existing powers.
- Better Markets challenges the legal rationale for CFTC oversight and disputes claims that Congress intended the agency to be a primary retail crypto regulator.
- The proposal also contemplates a new federal category for qualifying crypto trading platforms that would bring eligible exchanges under CFTC oversight.
- SEC activity continues in parallel, including custody-related proposals for advisers and additional crypto-related securities guidance.
Better Markets argues retail crypto needs securities-style protections
In its comments, Better Markets pointed to a core institutional distinction between the regulators. Benjamin Schiffrin, director of securities policy at the nonprofit financial reform advocacy group, said the CFTC does not have the same investor-protection responsibility as the SEC.
Schiffrin argued that the CFTC’s mandate has historically focused on commodity and derivatives markets dominated by large institutions with limited retail participation. In that context, he warned that applying CFTC rules to crypto transactions marketed to retail customers could mean losing protections that investors would otherwise receive in securities regulation.
“Unlike the SEC, the CFTC lacks an investor protection mandate,” Schiffrin said, adding that “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.”
Dispute over statutory intent and the “crypto capital” message
Better Markets also challenged the premise behind the CFTC’s authority. Schiffrin noted that the statutory authority the CFTC is relying on was originally enacted to address fraud in leveraged precious-metals trading, and he argued that this history does not necessarily demonstrate Congress intended the CFTC to become the main regulator for retail crypto activity.
Beyond jurisdictional questions, Better Markets criticized the proposed framework’s potential structure and its implications for market relationships. According to Schiffrin, the framework could permit affiliations between market participants in ways that he said contributed to the conditions behind FTX’s collapse.
Separately, Schiffrin took issue with CFTC Chair Mike Selig’s statements about making the United States the “crypto capital” of the world. Better Markets’ position, as reflected in Schiffrin’s remarks, was that the concept is unsupported and that crypto’s real-world utility remains limited—used largely for speculation or for criminal activity.
That characterization was contested by industry participants. Nate Geraci, president of NovaDius Wealth Management, pushed back on the framing, arguing that the industry is primarily seeking clearer “rules of the road.” He suggested that if Congress cannot provide that clarity, regulators like the CFTC and SEC may need to fill the gap.
CFTC proposal includes a new category for crypto platforms
The CFTC’s filing seeks public comment on a potential regulatory approach for retail crypto transactions involving margin, leverage, or financing. While Better Markets focused heavily on investor protection and regulatory fit, the proposal itself reportedly also includes a structural element: it considers creating a new federal category for qualifying crypto trading platforms that would bring eligible exchanges directly under CFTC oversight.
For market participants, that kind of categorization matters because it can determine which rule set applies, how compliance burdens are allocated, and which regulator becomes the primary supervisory authority for certain venues. It also signals that the CFTC is not limiting its work to transaction-level conduct; it is contemplating governance for the trading venues connected to these retail activities.
The public comment process represents an early checkpoint. The framework is still subject to feedback and potential revision before any final rules are adopted.
Regulators move forward as Congress stalls CLARITY
Better Markets’ critique arrives at a time when US crypto policy is increasingly shaped by regulatory action under existing laws rather than by new legislation. The CLARITY Act—an effort to provide clearer statutory treatment for parts of the crypto market—failed to advance in Congress, pushing the CFTC and SEC to proceed with their own approaches.
The SEC, meanwhile, has also continued to advance crypto-related measures. The input references SEC proposals including easing certain custody rules for investment advisers, a separate move toward allowing limited tokenized US stock trading, and the issuance of new guidance on how securities laws apply to crypto assets.
Taken together, the parallel paths illustrate a key tension facing retail users: different regulators may apply different frameworks to crypto activity depending on how transactions and platforms are categorized—an issue Better Markets says could leave investors worse off if CFTC rules do not replicate the investor protections associated with securities oversight.
What to watch as comments close in
As the CFTC’s consultation moves forward, readers should focus on whether the final framework meaningfully addresses investor safeguards for retail participants and how it would treat relationships among market participants and eligible trading venues. With the SEC simultaneously advancing its own crypto measures, the outcome of this comment process may help determine how US crypto oversight will be split—or reconciled—going forward.
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