Crypto derivatives exchange sues SEC for clarity over XRP futures

The Securities and Exchange Commission still firmly believes that the cryptocurrency XRP is a security, FOX Business has learned.

The revelation comes following a lawsuit filed in an Illinois district court Thursday evening by crypto derivatives exchange Bitnomial, which sued Wall Street’s top cop over its claim that it has jurisdiction over a planned futures contract that tracks the price of XRP, the seventh-largest digital asset by market cap.

Bitnomial, which is regulated by the SEC’s sister agency the Commodity Futures Trading Commission, filed for the XRP US Dollar Futures contract in August following the conclusion of the SEC’s lawsuit against blockchain payments firm Ripple, where a federal judge ruled against the SEC’s claim that XRP is a security.

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According to Bitnomial’s lawsuit, the SEC contacted the exchange shortly after the filing, claiming that XRP Futures are “security futures” that are subject to joint SEC and CFTC jurisdiction, and that Bitnomial would be violating federal securities laws if it proceeded with the listing. The SEC also said Bitnomial would be required to comply with additional requirements before listing XRP Futures, including registering as a national securities exchange.

“The SEC takes the view that the underlying asset, XRP, is an investment contract and, therefore, transactions in XRP constitute a security under the Securities Exchange Act,” the lawsuit states. “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 SEC had no immediate comment. 

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The SEC’s claim that XRP futures are securities futures is a further escalation in the turf war between the securities regulator and the commodities regulator, which are currently vying for sole jurisdiction over digital assets.

The biggest question remains whether cryptocurrencies should be classified as securities or commodities and, in the absence of a regulatory framework, the status of certain tokens is being decided by the courts.

The CFTC currently oversees futures contracts for bitcoin and ether, the only two digital assets the SEC has deemed to be non-securities.

Signage is seen outside of the US Commodity Futures Trading Commission (CFTC) in Washington, D.C., U.S., August 30, 2020. REUTERS/Andrew Kelly (Reuters Photos)

In addition to seeking a declaration from a judge that XRP Futures are not securities futures, Bitnomial is asking the court to issue an order that prevents the SEC from claiming authority over XRP Futures and taking any legal action against the exchange…