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SEC Commissioner Mark Uyeda discusses the agency's handling of cryptocurrency on 'Mornings with Maria.'
The Securities and Exchange Commission still firmly believes that the cryptocurrency XRP is a security, Gxstocks 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 SEC and CFTC, which are currently vying for sole jurisdiction over digital assets. Bitnomial believes its lawsuit will help provide some clarity about how crypto derivatives should be regulated and which regulator should oversee them.
The CFTC currently oversees futures contracts for bitcoin and ether, the only two digital assets the SEC has deemed to be non-securities.
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 Bitnomial related to its product offering.
"Establishing this precedent is not just about XRP; it’s about all digital assets," Bitnomial CEO Luke Hoersten tells Gxstocks.
"Unlike other U.S. businesses in litigation with the SEC, Bitnomial has not been accused of wrongdoing," he said. "As such, we are in a unique position to push for a court decision on the securities or commodities classification of XRP futures following the landmark determination as a non-security in the Southern District of New York case."
Bitnomial's case puts the hotly-contested issue of whether XRP is a security back in a district court at the same time the issue could be put before the Second Circuit.
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SEC Commissioner Mark Uyeda said the agency's crypto approach has been "really a disaster for the whole industry." (Photo Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images / Getty Images)
The SEC filed a notice of appeal in the Ripple case last week, signaling that it will likely contest a New York federal judge's decision that XRP, when traded on exchanges, is not a security. Ripple filed a notice of cross-appeal on Thursday, but neither entity has disclosed the specifics of their appeals.
Bitnomial’s lawsuit is the second one filed against the SEC this week. Digital asset exchange Crypto.com announced it was suing the agency on Tuesday, alleging the regulator is overstepping its jurisdiction by claiming that nearly all crypto assets are securities.
