The first thing that caught me about the Better Markets intervention was not the argument. It was the word cop.
I have a habit, formed over twenty-six years of watching this industry, of reading regulatory language the way I once read poetry โ for the words that carry weight beyond their dictionary meaning. Wrong cop is doing enormous work inside three syllables. It assumes that retail crypto investors are a population that needs policing at all; that a single federal agency should be the one doing the policing; and that the question of which agency is a question of competence rather than jurisdiction. Every one of those assumptions is contestable. None of them were contested in the coverage that followed.
Better Markets โ a Washington advocacy organization whose institutional identity is built almost entirely on distrust of lightly regulated finance โ argued this month that the Commodity Futures Trading Commission is the wrong agency to police retail crypto markets. The group's reasoning, as it reached the crypto press, ran along three lines: the CFTC lacks the professional capacity and resources to protect retail investors; its historical identity is that of a wholesale, derivatives-focused regulator rather than a consumer-protection body; and expanding its role without an explicit legislative mandate risks leaving protection standards vague. On its surface, this is a narrow procedural objection. Beneath the surface, it is a confession โ an admission that the United States has assembled an entire regulatory apparatus for an asset class it has never legally defined, and is now arguing about which branch of that apparatus should pretend otherwise.
I want to take that confession seriously, because I think most of the industry is reading it wrong. The reflexive response from crypto-native readers was to sort Better Markets into the enemy column โ another paternalist group trying to hand more power to the Securities and Exchange Commission. That reading is understandable and, I think, largely beside the point. The interesting question is not whether Better Markets wants stricter oversight. The interesting question is why the phrase "retail crypto" keeps getting invoked as though it described a coherent thing โ and what happens to investor protection when the thing it describes has never been given a legal shape.
Context: two cops, one crime scene, no definition
To understand why a single advocacy statement can carry this much structural weight, you have to understand the peculiar shape of American crypto regulation. The United States does not regulate "crypto." It regulates securities, under laws written in 1933 and 1934, and it regulates commodities and derivatives, under a law written in 1936. Crypto was not contemplated by any of them. So the entire edifice rests on a definitional question: is a given digital token a security or a commodity? Everything downstream โ which agency supervises it, what disclosures are required, how retail investors are protected โ flows from that single unresolved question.
The SEC has answered it aggressively, treating most tokens as investment contracts under the Howey test: money invested, in a common enterprise, with an expectation of profit, derived from the efforts of others. The CFTC has answered it more gently, historically treating the most decentralized assets โ Bitcoin and Ether among them โ as commodities it may police for fraud and manipulation, while declining to claim broad authority over the spot market. Two agencies, two philosophies, one vacuum where a definition should be.
This is not a new fight. It has been running for a decade, and it has produced a body of case law that resolves individual disputes without ever resolving the underlying category. The Ripple litigation clarified something about institutional sales and left the retail question suspended. Enforcement actions have multiplied without producing a rule. Meanwhile the legislative branch, which is the only body actually empowered to end the ambiguity, has produced draft after draft โ market-structure bills, stablecoin frameworks, clarity acts โ none of which have become law. I have sat in rooms where lobbyists described these bills as "imminent" for three consecutive years. They are always imminent. They are never law.
What Better Markets has done, whether it intended to or not, is name the vacuum out loud. By insisting that the CFTC is the "wrong cop," the group is pointing at the fact that there is no right cop โ that the mandate everyone keeps invoking does not exist in statute. That is a more radical observation than the headline suggests. It is not a complaint about one agency's budget. It is an indictment of a regulatory system that has been operating for years on borrowed authority and improvised jurisdiction.
I have watched this improvisation from an unusual vantage point. In 2025, as the governance architect for a DAO focused on municipal data sovereignty, I spent six months in rooms where regulators and protocol developers tried to speak to one another. I was the translator. And what I learned in those rooms is that the two sides are not actually disagreeing about crypto. They are disagreeing about what a mandate is โ whether it is a cage that constrains an agency, or a promise that someone, somewhere, is responsible for the person who loses money. That disagreement, not the CFTC-versus-SEC rivalry, is the real fault line beneath this story.
Core: the argument, deconstructed
Better Markets' case rests on three claims, and each deserves to be taken apart rather than applauded or dismissed.
The first is capacity: the CFTC lacks the resources and expertise to protect retail investors. This is, on the numbers, the strongest of the three claims. The CFTC's budget and headcount are a fraction of the SEC's, and its staff are trained to think in terms of derivatives markets, position limits, and clearing โ not in terms of disclosure regimes designed for unsophisticated buyers. If you handed the agency a retail spot market to supervise tomorrow, it would be doing so with a fraction of the enforcement muscle and almost none of the investor-education infrastructure that the SEC has spent ninety years building. That is not a moral failing; it is a structural fact. A regulator is a machine with a design, and the CFTC was not designed for this.
But capacity arguments cut in two directions, and the second edge is sharper than the first. If the CFTC is under-resourced for the task, the honest remedy is to resource it or to assign the task elsewhere โ not to let the task go undone. The choice is not between a well-funded cop and an under-funded one. In the current arrangement, it is between an under-funded cop and no cop at all. Regulatory ambiguity is not a neutral state; it is a transfer of risk from institutions to individuals. Every year that the definitional question remains open, the cost is paid by the retail investor who cannot know, in advance, which rulebook will be applied to the asset they are buying.
The second claim is identity: the CFTC is a wholesale regulator, not a consumer-protection body. This is historically accurate and philosophically interesting. The CFTC's animating purpose has always been market integrity โ preventing manipulation and fraud in markets presumed to be populated by sophisticated participants. The SEC's animating purpose has been investor protection, built on the premise that public markets include people who need to be defended from information asymmetry. These are genuinely different missions, and the distinction matters because it determines what "protection" even means. Under a market-integrity mandate, protecting retail investors means punishing the manipulator after the fact. Under an investor-protection mandate, it means requiring disclosure before the fact. One is a police function; the other is a disclosure function. Better Markets is right that these are not the same job.
The third claim is mandate: expanding the CFTC's role without explicit legislative authorization risks leaving standards vague. This is where the argument becomes more than procedural, because it touches the deepest structural flaw in the whole system. An agency that expands into a new domain without a statutory mandate does so through interpretation โ through the slow accumulation of enforcement positions and guidance documents that never quite become rules. That kind of authority is fragile in both directions: it can be reversed by a change of administration, and it can be challenged in court by anyone with standing. A protection standard that can evaporate is not a protection standard at all.
Put the three claims together and you get something more coherent than the crypto press reported. Better Markets is not simply asking for the SEC to win the turf war. It is asking for the turf war to be settled โ for someone to write down, in law, who is responsible for the retail investor, and to fund that responsibility. That is not an anti-crypto position. It is an anti-vacuum position. And an anti-vacuum position is one that anyone who cares about this industry's long-term legitimacy should be able to hold.
Here is where my own experience makes me sympathetic to the group's underlying worry, even as I distrust its framing. During DeFi Summer in 2020, I led a governance working group at MakerDAO and read through more than five hundred voting proposals. I found a flaw in the risk parameters that fell hardest on the smallest collateral holders โ the people with the least ability to absorb a liquidation. When the large holders pushed back, arguing that stability mattered more than equity, I wrote a dissenting essay called "The Quiet Collapse of Equity in Code." What I learned from that episode is that algorithmic neutrality is not the same thing as fairness; a system can be perfectly neutral and still distribute its harms downward, onto the people least equipped to bear them. Regulation is a crude instrument, but the vacuum that Better Markets is pointing at does exactly what the risk parameters did: it concentrates uncertainty on the retail participant and shields the sophisticated one, because the sophisticated participant can afford the lawyers who navigate ambiguity. The absence of a cop is not the absence of enforcement. It is enforcement by attrition, and it always falls on the same people.
Contrarian: the wrong question, asked by the wrong side
Now let me say the thing that will annoy both camps, because I think the whole debate is being conducted one level too high.
Everyone is arguing about which agency should police retail crypto. Almost no one is asking whether "retail crypto" is a category that can be policed in the way either agency imagines. The regulatory model both the SEC and the CFTC inherited assumes a market with intermediaries: issuers who make disclosures, brokers who carry fiduciary duties, exchanges that act as gatekeepers, custodians who hold assets. Retail protection in traditional finance is not primarily about the regulator at all. It is about the chain of intermediaries the regulator supervises. The disclosure regime works because a broker stands between the issuer and the buyer; the custody regime works because a custodian stands between the asset and the client. Remove the intermediaries โ which is, of course, the entire point of decentralized finance โ and you remove the surface the regulatory model was built to grip.
This is why the "wrong cop" framing, however well-intentioned, misdescribes the problem. The question is not whether the CFTC or the SEC is the right cop for the retail crypto beat. The question is what policing even looks like in a market that has deliberately dissolved the intermediaries through which policing has historically operated. You can assign the beat to either agency and the structural mismatch remains. You cannot protect a participant by supervising an intermediary who has been designed out of existence.
I think about this in the context of the Tornado Cash sanctions, which remain the clearest illustration of how badly the old model fits the new object. When the Treasury sanctioned a piece of open-source software โ a set of smart contracts, not a company, not a custodian, not an issuer โ it did not protect anyone. It demonstrated that the state's instinct, when confronted with a system that has no intermediary to grip, is to grip the code itself. And in doing so it placed every developer who writes privacy-preserving software under a cloud of legal risk. That is what happens when you try to police a market that has removed the surfaces your policing depends on: you reach for the nearest thing that looks like a handle, and the handle turns out to be a human being who wrote a line of code. The Tornado Cash precedent is not a footnote to this debate. It is the clearest evidence that the debate is being conducted in the wrong vocabulary.
There is a second contrarian point, and it is directed at my own side. The crypto industry has spent years demanding "regulatory clarity" as though clarity were an unqualified good. But clarity is a directionless virtue. A clear rule can be a liberating rule or a strangling one; the CFTC-versus-SEC fight is not a fight about whether to be clear, but about which clarity to impose. If clarity arrives in the form of an SEC-led disclosure regime calibrated for securities, the industry will get certainty and lose the thing that made it interesting. If it arrives as a CFTC-led light-touch regime, the industry will get room to build and retail investors will get a thinner shield. Better Markets is, in effect, arguing for the first clarity and warning against the second โ and the industry's reflexive hostility to that argument is a sign that it has been optimizing for room, not for durability.
There is a third point, and it is the one that should worry American builders most. A jurisdiction that cannot define its own asset class does not merely fail to protect its investors. It exports its industry. I have watched projects in my own orbit quietly re-domicile โ to the European Union, where MiCA has at least drawn a perimeter; to Singapore and the UAE, where licensing regimes exist even if they are imperfect. Regulatory arbitrage is not a moral failure on the part of the builders; it is a rational response to a vacuum. But it has a cost that the "wrong cop" debate never mentions: the longer the United States argues about jurisdiction, the more of the industry it argues about is no longer there to regulate.
Curating the soul in a world of derivative clones. That phrase has been my shorthand for years for the work of preserving what is genuinely new in this technology against the pressure to make it look like everything that came before. I have to apply it here too, and the application is uncomfortable: if the crypto industry wants to be treated as a genuinely new thing, it cannot simultaneously demand the regulatory treatment of an old one. It cannot ask for the light-touch supervision of a derivatives market while insisting it deserves the legitimacy of a public market. The two requests contradict each other, and a regulator โ any regulator โ will eventually notice.
Takeaway: the mandate is the message
So here is where I land, and it is not where the headlines put me.
Better Markets is right that the CFTC is a strange cop for retail crypto. It is right that capacity, identity, and mandate all point away from the agency as currently constituted. But the group's most valuable contribution is not its conclusion โ it is the vacuum its conclusion exposes. The United States has spent a decade arguing about which agency should protect retail crypto investors, without ever legislating that either one should. That is not a regulatory framework. It is a regulatory hypothesis, and it has been tested on real people's savings.
The mandate is the message. What the industry should be watching is not the next enforcement action or the next agency statement, but the slow, unglamorous work of writing jurisdiction into law โ the market-structure bills that keep dying in committee, the stablecoin frameworks that keep being redrafted, the court cases that resolve a single dispute while leaving the category untouched. That work is where the real leverage sits, and it is where the crypto industry's lobbying energy has been least effective, because the industry has been arguing about the cop when it should have been arguing about the crime.
I will end with the question I cannot answer, and that I suspect no one in Washington can either. If retail crypto is a market without intermediaries, and protection has always been the supervision of intermediaries, then what does protection actually mean? Not which agency should provide it โ what should it look like. Until someone can answer that, we will keep cycling through cops, each of them wrong, each of them arriving at a scene that was never designed to be policed. And the person who pays for that confusion will keep being the one with the smallest collateral and the fewest lawyers โ the retail investor whose only real protection, in the absence of a mandate, is the honesty of the people building the thing they trusted.
That is not a regulatory problem. It is a moral one. And it is the one the code cannot answer for us.