Crypto Exchange Battles SEC Over XRP Futures JurisdictionUS-based crypto exchange, Bitnomial, has sued the Securities and Exchange Commission (SEC) over the regulator's assertion of authority over the XRP US Dollar Futures contract (XRP Futures) which is still in the works for deployment on the exchange. This reactionary lawsuit follows a Wells Notice from the Commission, alleging that the planned XRP Futures product is a security offering and that Bitnomial must register as a securities exchange with the agency before offering the product.

Bitnomial Fights to Protect XRP Futures from SEC Overreach

Bitnomial Challenges SEC's Jurisdiction Over XRP Futures

In the lawsuit, Bitnomial has highlighted the SEC's continued efforts to "overextend its jurisdiction over digital assets," specifically the XRP Futures product, which the exchange argues is "beyond its statutory authority." Bitnomial contends that the XRP Futures contract does not meet the definition of a "Security Future" and that the SEC's authority does not extend to this product.The crux of Bitnomial's argument is that the underlying asset, XRP, is not a security. The exchange points to a recent ruling by a New York Southern District Court judge, who determined that only the programmatic sales of XRP to institutional investors constituted unregistered securities, not the general trading of the digital token. Bitnomial argues that since XRP is not a security, the XRP Futures contract cannot be classified as a security future.

Bitnomial Seeks Court Intervention to Protect XRP Futures

Bitnomial is asking the court to declare that the XRP Futures contract is not a security future under the Securities Exchange Act. Additionally, the exchange is seeking "injunctive relief" to block the SEC from claiming jurisdiction over the XRP Futures product or initiating any investigation or enforcement action against Bitnomial or its partners' activities involving the product on its platform.The lawsuit highlights the ongoing tension between the crypto industry and regulators, as exchanges like Bitnomial navigate the complex and often ambiguous regulatory landscape. Bitnomial's legal challenge underscores the need for clear and consistent guidelines from policymakers to ensure the responsible development of the crypto ecosystem.

Bitnomial's Argument: XRP Futures is Not a Security Future

Bitnomial's core argument in the lawsuit is that the XRP Futures contract does not meet the definition of a "Security Future" under the Securities Exchange Act. The exchange contends that since the underlying asset, XRP, is not a security, the XRP Futures product cannot be classified as a security future.Bitnomial points to the recent court ruling that only the programmatic sales of XRP to institutional investors constituted unregistered securities, not the general trading of the digital token. The exchange argues that this ruling limits the SEC's authority and does not extend to the XRP Futures contract.Furthermore, Bitnomial asserts that "XRP, the digital token and underlying product here, is not in and of itself a security. Further, XRP is not a security when exchanged anonymously on a secondary market." Based on this, the exchange argues that the XRP Futures contract, which would be physically settled through anonymous exchanges of XRP, cannot be considered a security future.

Bitnomial Seeks Judicial Intervention and Cost Recovery

In addition to the declaratory and injunctive relief sought, Bitnomial is also asking the court to order the SEC to cover all costs and attorney fees involved in the legal action. This reflects the exchange's determination to protect its interests and challenge what it perceives as the SEC's overreach.The outcome of this lawsuit will have significant implications for the crypto industry, as it could set a precedent for the regulatory treatment of digital asset-based futures products. Bitnomial's legal battle with the SEC underscores the need for clear and consistent guidelines from policymakers to ensure the responsible development of the crypto ecosystem.