Better Markets criticizes the U.S. CFTC for being unsuitable to regulate retail cryptocurrency trading

According to Cointelegraph, the nonprofit financial reform advocacy organization Better Markets criticized the CFTC's proposed framework for retail crypto trading, arguing that the protections for investors would be weaker than those provided by the SEC. The CFTC publicly solicited comments on the framework for retail crypto trading involving margin, leverage, or financing on Monday.

Benjamin Schiffrin, the Director of Securities Policy at Better Markets, stated that unlike the SEC, the CFTC lacks a mandate for investor protection, as its mission is to regulate commodity and derivatives markets that have historically been dominated by large institutions with minimal retail participation. Therefore, the CFTC is the wrong agency to oversee retail customer crypto asset trading.

Better Markets also questioned the CFTC's claim regarding Congressional intent to allow it to regulate such trading. Schiffrin pointed out that the statutory authority cited by the CFTC was originally established to address fraud in leveraged precious metals trading and does not indicate Congressional intent for the agency to become the primary regulator of retail crypto.

He also criticized the proposed framework for potentially allowing connections between market participants, which had previously led to the collapse of FTX. Schiffrin simultaneously condemned CFTC Chairman Mike Selig's statements about making the U.S. the global crypto capital, stating that he failed to explain why this would be a good thing and noted that crypto still lacks real use cases after 18 years.

Nate Geraci, President of NovaDius Wealth Management, countered that the crypto industry is simply seeking clear rules, and if Congress cannot provide them, the CFTC and SEC may have to take on that responsibility.