SEC Commissioner Mark Uyeda discusses the agency’s handling of cryptocurrencies on ‘Mornings with Maria.’
The Securities and Exchange Commission still firmly believes that cryptocurrency XRP is a hedge, FOX Business has learned.
The revelation follows a lawsuit filed Thursday evening by crypto derivatives exchange Bitnomial, which sued a top Wall Street cop over its claim that it has control over a structured futures contract that tracks the price of XRP, the largest digital asset by market cap.
Bitnomial, which is regulated by the SEC’s sister agency the Commodity Futures Trading Commission, certified itself with the XRP US Dollar Futures contract in August after the conclusion of the SEC’s case against blockchain firm Ripple, in which a federal judge threw out ruling 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, saying that XRP Futures is a “security future” under the joint SEC and CFTC, and that Bitnomial would be violating federal securities laws if it continued to be listed. The SEC also stated that Bitnomial will be required to comply with additional requirements prior to the listing of XRP Futures, including registration 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 securities under the Securities Exchange Act,” the lawsuit said. “Bitnomial disagrees with the SEC’s view that XRP is an investment contract and, therefore, a security, and that XRP Futures are thus a security future.”
The SEC did not immediately comment.
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The SEC’s claim that the future of XRP is the future of securities is a further escalation in the turf war between the two agencies currently fighting for sole authority over digital assets. Bitnomial believes its case will help provide some clarity about how crypto derivatives should be regulated.
The CFTC currently oversees futures contracts for bitcoin and ether, the only two digital assets the SEC has recognized as non-securities.
In addition to seeking a declaration from the Illinois district court that XRP Futures are not securities futures, Bitnomial is asking the court to issue an injunction preventing the SEC from seeking jurisdiction over XRP Futures and taking any legal action against Bitnomial related to its offering. .
“Unlike other US businesses in cases with the SEC, Bitnomial was not charged with wrongdoing. Therefore, we are in a unique position to force a court decision on the securities or asset classification of XRP futures following a historic determination as a non-security in the Southern region of New York,” Bitnomial CEO Luke Hoersten tells FOX Business. “Setting this precedent is not just about XRP; it’s about all digital assets.”
XRP’s status as a security has been a hotly contested issue amid the ongoing legal battle between the SEC and Ripple. A federal judge gave Ripple a partial victory last July when it ruled that the company’s sales of XRP on exchanges were not securities, but their sales to institutional investors were not.
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SEC Commissioner Mark Uyeda said the agency’s approach to crypto has been “truly catastrophic for the entire industry.” (Image credit by Omar Marques/SOPA Images/LightRocket via Getty Images/Getty Images)
The SEC filed a notice of appeal in the Ripple case last week, indicating that it will likely challenge Judge Torres’ ruling that XRP when traded on exchanges is not a security. Ripple filed a notice of opposition on Thursday, but neither party has yet disclosed details of its complaints.
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Bitnomial’s lawsuit is the second filed against the SEC this week. Digital asset exchange Crypto.com announced it is suing the SEC on Tuesday, accusing the regulator of overstepping its authority by claiming that almost all crypto assets are securities.
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