Bitnomial Exchange is taking legal action against the U.S. Securities and Exchange Commission (SEC) for what it claims is an overreach in its regulatory authority over digital assets. The exchange is specifically challenging the SEC’s attempt to regulate an XRP futures contract that is already under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
According to Bitnomial, the SEC has insisted that XRP Futures are considered security futures and therefore fall under the joint jurisdiction of both the SEC and the CFTC. This would require Bitnomial to comply with additional SEC regulations, including registering as a national securities exchange and submitting to the SEC’s oversight.
Bitnomial argues that the XRP futures contract should solely be regulated by the CFTC and that the SEC’s involvement would unnecessarily increase the company’s regulatory burden. The exchange has certified that the XRP futures comply with CFTC regulations and disagrees with the SEC’s classification of XRP as a security.
This lawsuit from Bitnomial comes on the heels of a similar legal action by Crypto.com, which is responding to a warning from the SEC about a potential enforcement action. Crypto.com criticized the SEC’s approach to regulating the crypto industry, stating that it has negatively impacted millions of American crypto holders.
The SEC has previously accused Ripple, the company behind XRP, of violating securities laws through the sale of the XRP token. In a recent ruling, a federal judge ordered Ripple to pay $125 million for its violation of securities laws, but the penalty was much lower than the $2 billion sought by the SEC. The regulator is currently appealing this decision.
It is important to note that CoinDesk, the source of this information, is a reputable media outlet that covers the cryptocurrency industry. Their journalists adhere to strict editorial policies to ensure integrity, independence, and freedom from bias in their reporting. Camomile Shumba, the regulatory reporter for CoinDesk, is based in the UK and does not hold any digital currencies.
Overall, the legal battle between Bitnomial Exchange and the SEC highlights the ongoing challenges and complexities of regulating digital assets in the United States. As the crypto industry continues to evolve, it is crucial for regulators to strike a balance between protecting investors and fostering innovation in this rapidly growing sector.