Better Markets said the CFTC’s proposed framework to bring certain cryptocurrency transactions and exchanges under its oversight will leave investors less protected than under the SEC.
Better Markets says the US derivatives regulator’s push to develop rules for certain retail crypto transactions could leave investors with weaker safeguards, arguing the agency is ill-equipped to oversee the market.
The Commodity Futures Trading Commission on Monday sought public comment on a potential framework for margined, leveraged or financed retail crypto transactions under its existing authority. Benjamin Schiffrin, director of securities policy at Better Markets, a nonprofit financial reform advocacy group, argued that CFTC oversight is less suited than the SEC to protecting retail investors.
“Unlike the SEC, the CFTC lacks an investor protection mandate. Its mission is to regulate the commodity and derivatives markets, which historically have been dominated by large institutions with very little retail investor participation,” said Schiffrin.
“Because the CFTC’s rules lack the protections that apply when investors trade securities regulated by the SEC, the CFTC is the wrong agency to regulate transactions involving crypto assets by retail customers,” he added.
Better Markets’ criticism comes as the CFTC and SEC move ahead with crypto policy under existing law after the CLARITY Act stalled in Congress. Both agencies had previously signaled they were prepared to act without new legislation.
Better Markets also challenged the CFTC’s claim that Congress intended the agency to oversee these types of retail crypto transactions.
Schiffrin noted that the statutory authority cited by the CFTC was originally enacted to address fraud in leveraged precious-metals trading, and argued that this did not show an intent for the agency to become a primary regulator for retail crypto.
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