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Better Markets says the CFTC lacks the investor-protection mandate to police retail crypto leverage

Better Markets says the CFTC lacks the mandate to police leveraged retail crypto under the plan it floated on October 5. Its harder objection for the agency to answer is legal: the group says the statute the CFTC relies on was written for leveraged precious-metals fraud.

The Investor · Invest desk

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What happened

  • The CFTC's advance notice covers Regulation CTX for leveraged retail crypto transactions and Regulation CAM, a new registration category for crypto asset markets.
  • The framework would also offer crypto platforms a voluntary federal alternative to state money transmitter licenses.
  • The CFTC is relying on authority it already holds under Section 2(c)(2)(D) of the Commodity Exchange Act, which covers certain leveraged retail commodity transactions.
  • The CFTC acted after the Clarity Act failed to advance in the Senate in September 2026.

Why it matters

  • Who has to decide decision If the rule is finalized, platforms holding state money transmitter licenses will have to decide whether one federal registration is worth meeting the CFTC's reserve and manipulation requirements.
  • Who's exposed exposure Because the plan rests on existing statute, a final rule would be easier to challenge in court or reverse than one written by Congress, according to Cryptobriefing's analysis.
  • What doesn't add up contradiction Selig cites FTX's collapse as his reason to act now, while Better Markets says the framework's affiliation terms could allow the same failure again.

Schiffrin's case against the plan has two halves. The first concerns the agency: "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," he said [7]. The second concerns the law. He noted that the authority the CFTC cites was originally enacted to address fraud in leveraged precious-metals trading. He argued that this history shows no intent for the agency to become the primary regulator of retail crypto [13].

Better Markets held this position before the notice came out. The group has a record of opposing efforts to widen the CFTC's digital-asset jurisdiction [15], and Schiffrin's objection extends to the asset itself: crypto "still lacks any real-world use case. It is used either purely for speculation or for criminal purposes," he said [16]. Nate Geraci, president of NovaDius Wealth Management, countered that the industry is seeking clear rules of the road, and that if Congress cannot supply them, the CFTC and SEC may have to [17].

I think the statutory point is the stronger half. The protection argument compares two whole rulebooks: "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," Schiffrin said [8]. The notice itself would apply proof-of-reserves and anti-manipulation controls to platforms offering leveraged or margined crypto to retail customers [3]. The unresolved term is ownership structure. Better Markets says the framework could allow affiliations between market participants of the kind that contributed to FTX's collapse [14], and neither source describes which affiliations the CFTC has in mind. If a formal rule lets them stand, the protection half of the case outweighs the statutory half.

The notice could stay a notice. An ANPRM asks the public for input before the agency writes a formal rule [1], and Congress could still revisit market structure legislation. The CFTC could also finalize a rule and defend its reading of the statute in court. Or the two regulators could proceed side by side. Selig calls the effort a complement to the SEC's work [10], and the SEC has separately proposed easing some custody rules for investment advisers and allowed limited tokenized US stock trading [18].

For now the CFTC's staff time is going into a request for comment, and platforms have no rule text to comply with yet [1]. Counted from the October 5 release [6], the 60-day window [12] closes around December 4 [20].

What to watch

  • Comment letters showing which affiliations between exchanges and other market participants the CFTC is prepared to allow.
  • Whether the SEC responds publicly to the CFTC framework that Selig describes as a complement to the SEC's own work.
  • Whether Congress revisits market structure legislation after the Clarity Act stalled in the Senate.

Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.

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What the record supports and how the coverage leans. The claims behind it follow.

Reality

Evidence55
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  1. [1]

    The CFTC issued an advance notice of proposed rulemaking (ANPRM), an early step in which the agency asks the public for input before writing a formal rule.

    Reported Supported Source: CryptobriefingView cited source
  2. [2]

    The notice covers two proposed frameworks: Regulation CTX, focused on leveraged retail crypto transactions (CTXs), and Regulation CAM, which would create a new registration category for a 'crypto asset market'.

    Reported Supported Source: CryptobriefingView cited source
  3. [3]

    Platforms offering retail customers leveraged or margined crypto trading would fall under requirements that include proof-of-reserves and controls against market manipulation.

    Reported Supported Source: CryptobriefingView cited source
  4. [4]

    The framework would also function as a voluntary federal alternative to state-level money transmitter licenses.

    Reported Supported Source: CryptobriefingView cited source
  5. [5]

    The proposal relies primarily on Section 2(c)(2)(D) of the Commodity Exchange Act, the provision governing certain leveraged retail commodity transactions, using authority the CFTC already has.

    Reported Supported Source: CryptobriefingView cited source
  6. [6]

    The CFTC released its proposal on October 5, 2026, and Better Markets criticized it the same day.

    Reported Supported Source: CryptobriefingView cited source
  7. [7]

    "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 Benjamin Schiffrin, director of securities policy at Better Markets.

    Reported Supported Source: Benjamin Schiffrin, Better Markets, quoted by CointelegraphView cited source
  8. [8]

    "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," Schiffrin said.

    Reported Supported Source: Benjamin Schiffrin, Better Markets, quoted by CointelegraphView cited source
  9. [9]

    CFTC Chairman Mike Selig framed the initiative as a way to address regulatory gaps without waiting for further congressional action and tied it directly to problems exposed by the collapse of platforms like FTX.

    Reported Supported Source: Cryptobriefing, describing Selig's framingView cited source
  10. [10]

    Selig positioned the effort as a complement to SEC initiatives, not a replacement.

    Reported Supported Source: Cryptobriefing, describing Selig's framingView cited source
  11. [11]

    The CFTC's move follows the Senate's failure to advance the Clarity Act in September 2026.

    Reported Supported Source: CryptobriefingView cited source
  12. [12]

    The ANPRM includes a 60-day public comment period.

    Reported Supported Source: CryptobriefingView cited source
  13. [13]

    Schiffrin noted that the statutory authority cited by the CFTC was originally enacted to address fraud in leveraged precious-metals trading, and argued this did not show an intent for the agency to become a primary regulator for retail crypto.

    Reported Supported Source: Benjamin Schiffrin, Better Markets, per CointelegraphView cited source
  14. [14]

    Schiffrin criticized the framework for potentially allowing affiliations between market participants that Better Markets said contributed to FTX's collapse.

    Reported Supported Source: Better Markets, per CointelegraphView cited source
  15. [15]

    Better Markets has a history of opposing efforts to expand the CFTC's jurisdiction over digital assets, consistently warning that retail investors could end up with weaker safeguards.

    Reported Supported Source: CryptobriefingView cited source
  16. [16]

    Schiffrin said crypto "still lacks any real-world use case. It is used either purely for speculation or for criminal purposes."

    Reported Supported Source: Benjamin Schiffrin, Better Markets, quoted by CointelegraphView cited source
  17. [17]

    Nate Geraci, president of NovaDius Wealth Management, pushed back, saying the crypto industry is seeking clear rules of the road and arguing that if Congress cannot provide them, the CFTC and SEC may have to.

    Reported Supported Source: Nate Geraci, per CointelegraphView cited source
  18. [18]

    The SEC 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.

    Reported Supported Source: CointelegraphView cited source
  19. [19]

    Rules built on reinterpreted existing authority can be more vulnerable to legal challenge or reversal than rules Congress writes directly.

    Reported Supported Source: Cryptobriefing analysisView cited source
  20. [20]

    Counted from the October 5, 2026 release, a 60-day comment window would close around December 4, 2026.

    Derived Supported

Sources

2 independent publishers whose own reporting we read for this story.

  1. cointelegraph.com

    1 article · October 5, 2026

    Better Markets says CFTC is ‘wrong agency’ to regulate retail crypto
  2. cryptobriefing.com

    1 article · October 5, 2026

    Better Markets says the CFTC is the wrong cop for retail crypto

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