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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.

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

“However, I note that the complaint appears to assert that fund shares held by investors—namely, securities—can themselves constitute leveraged trading pursuant to section 2(c)(2)(D) of the Commodity Exchange Act. This interpretation fails to distinguish between an investment in a fund, which would typically be a security under the jurisdiction of the SEC, and the trading activities of a fund, alleged here to be under the CFTC’s jurisdiction,” Pham’s statement reads.

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.

“Owning shares is not the same thing as trading derivatives.”

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.

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