CFTC Commissioner hints at overreach on KuCoin charges

Pham argued that the complaint “appears to assert that fund shares held by investors—namely, securities—can themselves constitute leveraged trading,” a stance she believes incorrectly merges the nature of a financial instrument with financial activity, disrupting securities market foundations.

The incident highlights the ongoing debate and confusion over the precise regulatory purview of cryptocurrencies within the United States.

The SEC and CFTC have previously clashed over classifying specific cryptocurrencies, such as Ether (ETH). SEC Chair Gary Gensler suggests many cryptocurrencies fall under securities, while the CFTC views Ether as a commodity in its recent charges.

The divergence in viewpoints shows the critical regulatory situation, as CFTC Chair Rostin Behnam pointed out during a congressional hearing earlier this month. Behnam emphasized the significant implications if the SEC were to classify ether as a security, potentially putting CFTC registrants who list ether futures in a position of non-compliance with SEC regulations.