Summary
CFTC Commissioner questions agency’s lawsuit against KuCoin, arguing that leveraged tokens should be regulated by the SEC as securities, not the CFTC as commodities. The complaint could undermine securities regulators’ oversight of markets. KuCoin settled charges in December for operating an unregistered exchange.
Key Points
1. Commissioner Caroline Pham criticized the CFTC’s “aggressive enforcement action” against KuCoin, questioning the agency’s interpretation of leveraged tokens as digital asset commodity derivatives.
2. Pham argued that if the leveraged tokens are considered securities, regulation should fall under the SEC’s jurisdiction, not the CFTC’s, potentially undermining securities regulators’ ability to oversee markets.
3. Despite settling charges with the New York Attorney General’s office last December, KuCoin is facing a new lawsuit from the CFTC for allegedly violating the Commodity Exchange Act by offering unregistered products.