Chicago-based digital asset derivatives exchange Bitnomial has initiated legal action against the U.S. Securities and Exchange Commission (SEC), challenging the agency’s claim that XRP futures fall under the category of “security futures.”
The dispute arose after Bitnomial, which operates under the regulation of the Commodity Futures Trading Commission (CFTC), self-certified its XRP U.S. Dollar Futures contract in August, Fox Business reported.
The certification followed the conclusion of the high-profile SEC vs. Ripple lawsuit, which addressed whether XRP qualifies as a security.
Bitnomial Lists Futures Contract Related to XRP
Bitnomial’s certification process allowed the exchange to list and trade the futures contract without requiring explicit CFTC approval, as the product was deemed to meet regulatory standards under commodity laws.
However, the SEC intervened soon after the certification, asserting that XRP futures should be classified as “security futures,” subject to both SEC and CFTC oversight.
According to the SEC, Bitnomial would be in violation of federal securities laws if it proceeded with listing the product without additional regulatory compliance.
Specifically, the SEC demanded that Bitnomial register as a national securities exchange before offering XRP futures to its users.
In response, Bitnomial filed a lawsuit to contest the SEC’s classification of XRP as a security, which in turn affects how the XRP futures contracts are regulated.
The exchange argues that its product should not fall under SEC jurisdiction, given that XRP should not be considered a security.
“Bitnomial disagrees with the SEC’s view that XRP is an investment contract and, therefore, a security, and that XRP Futures are thus security futures,” the company stated in its legal filing.
Bitnomial’s CEO, Luke Hoersten, emphasized the importance of this legal battle, noting that the exchange’s clean compliance record strengthens its position in challenging the SEC.
Hoersten believes that a court ruling in this case could set a crucial precedent for how crypto derivatives like XRP futures are regulated in the United States.
Crypto.com Sues SEC Too
Bitnomial’s lawsuit follows closely on the heels of Crypto.com’s legal action against the SEC.
Crypto.com, one of the world’s leading crypto exchanges, recently took the SEC to court after receiving a Wells notice—a formal notification of potential enforcement actions.
The company accused the SEC of overstepping its authority by classifying most crypto assets as securities.
Since 2023, the SEC has ramped up its enforcement actions against the crypto industry, targeting companies like Consensys, Uniswap Labs, and OpenSea.
The list of entities under scrutiny also includes prominent players like Ripple Labs, Binance, and Coinbase, all of which remain embroiled in legal disputes with the regulator.
Ripple, whose legal battle with the SEC has been ongoing for over three years, recently filed a notice of appeal to challenge aspects of the court’s decision in the initial lawsuit.
Last July, Judge Analisa Torres ruled that Ripple’s sales of XRP to retail investors did not qualify as securities transactions, although institutional sales did.
While Ripple was ordered to pay $125 million to settle the matter, the case remains far from over, as both sides continue to seek further legal recourse.
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