Better Markets, a nonprofit financial reform advocacy group, criticized the Commodity Futures Trading Commission’s proposed framework for retail crypto trading, saying it would provide weaker protections for investors than the Securities and Exchange Commission.
CFTC opens comment process on retail crypto framework
The CFTC on Monday sought public comment on a framework for retail crypto transactions involving margin, leverage, or financing.
Better Markets says CFTC is the wrong regulator for retail crypto
Benjamin Schiffrin, Better Markets’ director of securities policy, said the CFTC, unlike the SEC, does not carry an investor-protection mandate. He said the agency’s mission has been to regulate commodity and derivatives markets that have historically been dominated by large institutions, with limited participation from retail investors, making it the wrong regulator for retail customers’ crypto asset trading.
Better Markets also questioned the CFTC’s claim that Congress intended the agency to regulate this category of trading. Schiffrin said the statutory authority cited by the CFTC was originally created to address fraud in leveraged precious metals transactions and does not show that Congress meant for the agency to become the primary regulator of retail crypto.
Schiffrin also criticizes the draft and Selig’s remarks
Schiffrin said the framework under consideration could allow affiliations among market participants, the kind of relationships that contributed to the collapse of FTX.
He also criticized CFTC Chair Mike Selig’s remarks about making the United States the global crypto capital, saying Selig did not explain why that would be a good outcome. Schiffrin added that crypto still lacks real-world use cases after 18 years.
Geraci offers a different view
NovaDius Wealth Management president Nate Geraci pushed back, saying the crypto industry is simply asking for clear rules. If Congress cannot provide them, he said, the CFTC and SEC may have to take on that role.