Better Markets said the US derivatives regulator’s push to develop rules for certain retail crypto transactions could leave investors with weaker safeguards and argued that the agency is not well 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. According to Cointelegraph, Benjamin Schiffrin, director of securities policy at Better Markets, said CFTC oversight is less suited than SEC oversight to protecting retail investors because the CFTC lacks an investor protection mandate and was built to regulate commodity and derivatives markets that have historically been dominated by large institutions with limited retail participation. He added that the CFTC is the wrong agency to regulate retail crypto transactions because its rules do not include the protections that apply when investors trade securities regulated by the SEC.

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. Schiffrin also questioned the CFTC’s claim that Congress intended the agency to oversee these types of retail crypto transactions, saying the statutory authority cited by the CFTC was originally enacted to address fraud in leveraged precious-metals trading and did not show an intent for the agency to become a primary regulator for retail crypto.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 further took aim at CFTC Chair Mike Selig’s comments about making the US the crypto capital of the world, while Nate Geraci, president of NovaDius Wealth Management, pushed back and said the industry is seeking clear rules of the road and that the CFTC and SEC may need to provide them if Congress cannot.

The CFTC’s proposed 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 moved 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.