Better Markets, a nonprofit financial reform advocacy group, said the U.S. Commodity Futures Trading Commission’s plan to regulate parts of the crypto market could leave retail investors with weaker protections than they would receive under the U.S. Securities and Exchange Commission framework. The group’s criticism came as the CFTC seeks public comment on a framework for margin, leveraged, or financed retail crypto transactions.
Benjamin Schiffrin, Better Markets’ director of securities policy, argued that the CFTC does not have an investor protection mandate and said its statutory authority was originally designed to address fraud in leveraged precious metals transactions. In his view, that does not support making the agency the primary regulator for retail crypto trading. He also said the proposed framework could permit affiliations among market participants that were previously seen as contributing to the collapse of FTX.
The debate is continuing as Congress has not moved forward with the CLARITY Act. Against that backdrop, both the CFTC and the SEC are still advancing crypto policy under existing law, with the CFTC considering a new federal category for qualifying crypto trading platforms and the SEC pursuing changes tied to custody rules, limited tokenized U.S. stock trading, and fresh guidance on how securities laws apply to crypto assets.
Better Markets, a nonprofit financial reform advocacy group, said the U.S. Commodity Futures Trading Commission, or CFTC, may leave retail investors with weaker protections than they would receive under the U.S. Securities and Exchange Commission, or SEC, if it moves ahead with plans to regulate parts of the crypto trading market and certain exchanges.
The CFTC has requested public comment on a framework covering margin, leveraged, or financed retail crypto transactions. Benjamin Schiffrin, Better Markets’ director of securities policy, said the agency does not have an investor protection mandate. He argued that its statutory authority was originally built to address fraud involving leveraged precious metals transactions, which in his view does not justify making the CFTC the primary regulator for retail crypto trading.
Schiffrin also said the proposed framework could allow affiliations among market participants that had previously been seen as contributing to the collapse of FTX.
With the CLARITY Act stalled in Congress, both the CFTC and the SEC are continuing to push crypto policy under existing law. The CFTC is considering a new federal category that would bring qualifying crypto trading platforms directly under its oversight. The SEC, for its part, has proposed easing some custody rules for investment advisers, allowing limited trading in tokenized U.S. stocks, and issuing new guidance on how securities laws apply to crypto assets.
The report was cited from Cointelegraph.
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