A commissioner from the CFTC cautions against encroaching on the SEC’s jurisdiction in the KuCoin case.

A commissioner from the CFTC is cautioning against conflicting interpretations of certain cryptocurrencies as either securities or commodities by two U.S. financial regulators.

Caroline Pham, a commissioner at the United States Commodity Futures Trading Commission (CFTC), expressed concerns that a recent aggressive enforcement action in the crypto space could create tension between the CFTC and the Securities and Exchange Commission (SEC).

In a statement issued on March 29, Pham noted that the CFTC’s enforcement action against the cryptocurrency exchange KuCoin seemed to extend the CFTC’s authority over certain securities. The commission 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 warned that the CFTC’s approach might encroach upon the SEC’s jurisdiction and potentially undermine decades of investor protection laws. She highlighted the distinction between owning shares and trading derivatives, emphasizing that conflating financial instruments with financial activities could disrupt securities markets’ foundations.

Pham’s statement reflects broader concerns among U.S. lawmakers and regulators regarding the appropriate roles of the CFTC and SEC in regulating cryptocurrencies and determining their classification as commodities or securities. Disagreements between officials representing both agencies have recently emerged, particularly regarding the classification of Ether. For example, the crypto firm Prometheum’s announcement of plans to offer custody services for Ether as a security has sparked debate.

The CFTC’s complaint against KuCoin suggested that Ether was considered a commodity. However, experts speculate that the SEC potentially labeling Ether as a security could impact the CFTC’s decisions on pending spot Ether exchange-traded fund applications.