Better Markets Challenges CFTC as Wrong Regulator for Retail Crypto

The U.S. Commodity Futures Trading Commission has moved to solicit public comment on a proposed framework for margined, leveraged, or financed retail crypto transactions—an initiative that has drawn sharp criticism from Better Markets. The financial reform nonprofit argues that placing such activities under the CFTC’s umbrella could leave consumers with weaker protections than those typically available under the SEC.

Better Markets’ concerns arrive as both the CFTC and SEC continue advancing crypto-related policy efforts after the legislative “CLARITY Act” stalled in Congress. With lawmakers yet to provide a new statutory structure, regulators are relying on existing authority—an approach Better Markets says is ill-suited to retail investor protection.

Key takeaways

• Better Markets says the CFTC is not designed for primary investor-protection oversight in retail-facing crypto transactions, unlike the SEC.


• The group disputes the CFTC’s interpretation of Congress’s intent behind the statutory authority it cites for retail crypto frameworks.


• Better Markets also criticizes aspects of the proposed framework that it believes could permit conflicts through affiliations among market participants.


• Industry leader Nate Geraci argues the sector’s push is for clear rules and that regulators may need to act if Congress cannot.


• The CFTC and SEC are both moving forward on crypto policy without waiting for new legislation.

Why Better Markets says retail protections could weaken

In comments tied to the CFTC’s request for public input, Benjamin Schiffrin—Better Markets’ director of securities policy—argued that the CFTC’s mandate does not align with the protections retail investors typically need. According to Schiffrin, the agency’s mission centers on regulating commodity and derivatives markets, which, historically, have involved far fewer retail participants than securities markets.

Better Markets’ core argument is that investor protections under SEC-regulated securities trading do not automatically carry over to a CFTC framework for retail crypto activity. Schiffrin contended that because the CFTC’s rules do not include the same safeguards applied to securities investors, the agency is the wrong regulator for transactions that involve retail customers.

In practical terms, Better Markets is warning that the “rules of the road” for retail crypto could end up less protective than those governing traditional investor-facing markets—precisely because the oversight structure and statutory investor-protection focus differ between regulators.

Dispute over CFTC authority and the intent behind it

Schiffrin also challenged the legal premise behind the CFTC’s proposed approach. Better Markets argued that the statutory authority the CFTC is relying on was originally enacted to address fraud in leveraged precious-metals trading. In Better Markets’ view, that history does not demonstrate that Congress intended the CFTC to become a central regulator for retail crypto transactions.

The nonprofit further criticized elements of the framework it believes could permit affiliations between market participants. Better Markets linked this concern to the broader pattern of industry failures that it says contributed to the collapse of FTX, though it did not suggest additional specifics beyond its general objection to affiliation-related risk in the framework under consideration.

Debate over the “crypto capital” argument

Better Markets’ critique also extended to CFTC Chair Mike Selig’s comments about making the United States the “crypto capital” of the world. Schiffrin questioned the framing, arguing there is no clear justification for treating crypto expansion as an unqualified national advantage.

In Schiffrin’s remarks, the underlying issue was the perceived gap between policy ambitions and real-world outcomes. He characterized crypto as lacking a meaningful use case beyond speculation and described it as being used for criminal purposes as well as legitimate activity.

That assessment was directly contested by Nate Geraci, president of NovaDius Wealth Management, who pushed back on the idea that the crypto industry’s goal should be dismissed. Geraci argued that the industry is essentially seeking clear rules rather than asking regulators to promote speculative outcomes. If Congress cannot deliver that clarity, Geraci said the CFTC and SEC may need to step in to establish workable regulatory boundaries, aligning with the direction in which both agencies are now moving.

CFTC and SEC proceed after the CLARITY Act setback

The Better Markets comments come as U.S. crypto policy continues moving forward through existing regulatory authorities. According to earlier coverage from Cointelegraph, the CLARITY Act failed to advance in Congress, prompting the CFTC and SEC to pursue their respective efforts without new legislation. The CFTC’s Monday move sought public comment on a potential framework for margined, leveraged, or financed retail crypto transactions under the agency’s authority, as reported by Cointelegraph in connection with the CFTC’s outreach.

Within the same broader regulatory effort, the CFTC’s proposed framework also considers a new federal category for crypto trading platforms designed to bring qualifying exchanges directly under CFTC oversight. For investors and market participants, such an approach matters because it could determine which regulator has jurisdiction and what compliance expectations apply—especially for retail-facing services that involve leverage or financing.

Meanwhile, the SEC has also continued to advance crypto-related measures. Cointelegraph reported that on Thursday the SEC proposed easing some custody rules for investment advisers offering crypto, while separately taking steps to allow limited tokenized U.S. stock trading and issuing new guidance on how securities laws apply to crypto. Taken together, the SEC’s actions indicate a parallel effort to shape compliance requirements for crypto products under the securities-law framework—precisely the structure Better Markets says the CFTC should not displace for retail investor protection.

For market participants, the tension running through this debate is not whether crypto regulation should exist, but which regulator should lead for retail protections—and what legal tools each agency can practically deploy. Better Markets argues the CFTC’s framework could under-protect retail customers, while the industry response suggests regulators should fill gaps now rather than wait for legislative certainty.

As the comment process and subsequent rulemaking move forward, readers should watch how the CFTC addresses investor-protection mechanics inside its framework, whether it acknowledges affiliation-related risks, and how the final proposal interacts with SEC policy—especially for retail users dealing with leveraged or financed crypto activity.

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