CFTC Commissioner hints at overreach on KuCoin charges

Commissioner Caroline Pham at the Commodity Futures Trading Commission (CFTC) has spoken out critically in public about the regulatory body’s decision to take legal action against the cryptocurrency exchange, KuCoin.

On March 26, the Commodity Futures Trading Commission and the U.S. Department of Justice filed charges against KuCoin, alleging they had been illegally running a digital asset derivatives exchange.

The accusation made by the Commodity Futures Trading Commission (CFTC) has ignited debates, mainly focusing on the territories of authority shared between the CFTC and its counterpart, the Securities and Exchange Commission (SEC).

“Pham pointed out that holding stock shares is different from dealing with derivatives. He voiced worries that the CFTC’s accusation blends investment assets with trading actions. If correct, this perspective might conflict with the SEC’s jurisdiction, threatening long-standing investor safeguards.”

Pham contended that the complaint seems to imply that investing in mutual fund shares, which are securities, equates to engaged in leveraged trading. However, according to Pham, this perspective incorrectly blends the character of a financial tool with trading behavior, potentially undermining the principles of securities markets.

The event brings into focus the ongoing argument and uncertainty in the US about exactly which laws apply to cryptocurrencies.

The SEC and CFTC have had disagreements in the past regarding how to categorize certain cryptocurrencies, including Ether (ETH). According to SEC Chair Gary Gensler’s perspective, most cryptocurrencies should be considered securities. On the other hand, the CFTC sees Ether as a commodity based on its recent accusations.

The difference in perspectives underscores the complex regulatory landscape, as CFTC Chair Rostin Behnam highlighted during a recent congressional hearing. Behnam warned of potential consequences if the SEC labeled ether as a security, which could leave CFTC members who offer ether futures at odds with SEC rules.

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2024-03-29 21:04