Better Markets, a nonprofit advocacy group, has criticized the Commodity Futures Trading Commission (CFTC) for its proposed framework to regulate retail cryptocurrency transactions. The organization argues that the CFTC is ill-equipped to oversee this market compared to the Securities and Exchange Commission (SEC), citing a lack of an investor protection mandate.
The CFTC recently requested public comment on a framework for margined, leveraged, or financed retail crypto transactions. Benjamin Schiffrin, director of securities policy at Better Markets, stated that the agency's existing authority, originally intended for precious-metals trading, does not justify its role as a primary regulator for retail crypto assets.
The proposed framework could potentially allow affiliations between market participants, which Better Markets claims contributed to the collapse of FTX. Furthermore, the group challenged the CFTC's interpretation of congressional intent regarding its oversight capabilities, noting that the agency historically focuses on large institutional derivatives markets.
While the CLARITY Act remains stalled in Congress, both the CFTC and SEC are moving forward with crypto policies under existing laws. The CFTC is considering a new federal category for trading platforms to bring them under its direct oversight, while the SEC continues to issue guidance on securities laws and custody rules for investment advisers.
