Caroline Pham, a member of the United States Commodity Futures Trading Commission (CFTC), has voiced concerns that a recent “aggressive” crypto enforcement action could lead to conflict with the Securities and Exchange Commission (SEC).
In a statement released on March 29, Pham stated that the CFTC’s enforcement case against cryptocurrency exchange KuCoin seemed to assert authority over certain securities. The commission had charged KuCoin with multiple violations of the Commodity Exchange Act (CEA) and CFTC regulations on March 26, alongside criminal charges from the U.S. Justice Department.
Pham expressed worry that the CFTC’s approach might encroach upon the SEC’s jurisdiction and undermine investor protection laws. She argued that by conflating a financial instrument with a financial activity, the CFTC could disrupt the foundations of securities markets. Pham emphasized that owning shares is not the same as trading derivatives.
Pham’s statement echoed the concerns of many U.S. lawmakers and regulators regarding the respective roles of the CFTC and SEC in cryptocurrency regulation. There has been ongoing disagreement between representatives of both agencies regarding the classification of Ether (ETH) as a commodity or security. This issue recently came to light when crypto firm Prometheum announced its plans to offer custody services for Ether as a security.
The CFTC’s complaint against KuCoin suggested that Ether was a commodity. However, legal experts have noted that if the SEC were to label ETH as a security, it could potentially impact the commission’s decision on several pending applications for spot Ether exchange-traded funds.
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