“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 questions “crypto capital” goal
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Schiffrin noted that the statutory authority cited by the CFTC was originally enacted to address fraud in leveraged precious-metals trading, and argued that this did not show an intent for the agency to become a primary regulator for retail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.
He also criticized the framework under consideration for potentially allowing affiliations between market participants that Better Markets said contributed to FTX’s collapse.
Schiffrin also took aim at CFTC Chair Mike Selig’s statements about making the US the crypto capital of the world.
“Yet he does not explain why that is a good thing. For example, the US is not the cocaine production capital of the world, and no one is complaining—for good reason,” he said.
“Crypto—after 18 years of effort and innumerable disproved and baseless claims—still lacks any real-world use case. It is used either purely for speculation or for criminal purposes,” he said.
Nate Geraci, president of NovaDius Wealth Management, pushed back on the characterization, saying the crypto industry is simply seeking clear rules of the road and arguing that, if Congress cannot provide them, the CFTC and SEC may have to do so.
CFTC, SEC move ahead after CLARITY setback
The CFTC’s newly proposed crypto framework also considers a new federal category for crypto trading platforms that would bring qualifying exchanges directly under CFTC oversight.
Meanwhile, the SEC has also pushed ahead with several crypto measures. On Thursday, it proposed easing some custody rules for investment advisers, while separately allowing limited tokenized US stock trading and issuing new guidance on how securities laws apply to crypto.
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