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

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 He noted that the authority the CFTC cites was originally enacted to address fraud in leveraged precious-metals trading.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].