CFTC’s approach in KuCoin suit may infringe on SEC's authority, Commissioner says

Commodity Futures Trading Commission (CFTC) Commissioner Caroline D. Pham says enforcement action sought against crypto exchange KuCoin may infringe on the authority of US Securities and Exchange Commission (SEC).

Commissioner Pham's statement follows a complaint the CFTC filed at US District Court for the Southern District of New York on March 26.

The charges alleged that KuCoin is operating an unregistered crypto asset derivatives trading platform.

CFTC's complaint came alongside a US Justice Department (DOJ) indictment of KuCoin and two of its founders for violating anti-money laundering laws.

A key distinction

In a statement released Friday, Commissioner Pham commended the CFTC’s Division of Enforcement’s move as it seeks to protect markets.

According to her, the CFTC’s approach could infringe on SEC’s authority, potentially undermining “decades of robust investor protection laws by conflating a financial instrument with a financial activity.”

It’s an outlook that may disrupt the foundations of the securities markets, the CFTC leader added.

Commissioner Pham's take brings to the fore the question of where the CFTC and SEC stand as far as the regulation of crypto is concerned.

In particular is the issue around what's a commodity and what's a security in relation to crypto assets. So far, it's only Bitcoin that seems to have a common ground between the two agencies - Bitcoin is as a commodity.

However, it's less clearer on other assets. CFTC has labelled Ethereum as a commodity, but the SEC has yet to clarify its stance.