Bitnomial, a cryptocurrency exchange, has initiated legal action against the U.S. Securities and Exchange Commission (SEC), including its five commissioners, alleging that the agency has overstepped its authority regarding the classification of digital assets. According to Bitnomial’s lawsuit, filed in an Illinois federal court on October 10, the exchange argues that XRP should be classified as a commodity rather than a security. The SEC’s assertion of authority over XRP is seen as an unwarranted duplication of regulatory responsibilities, as the Commodity Futures Trading Commission (CFTC) already oversees the asset.
Bitnomial has been authorized by the CFTC to trade crypto futures since 2020. In August, the exchange sought to expand its offerings by filing a self-certification to list XRP futures contracts. However, following communication from the SEC, Bitnomial was informed that these futures would be classified as securities, compelling the exchange to register as a securities exchange before it could proceed. The exchange contends that compliance with this requirement is impossible, as Ripple Labs, the entity behind XRP , has not registered the token as a security.
The lawsuit emphasizes that the SEC’s actions have effectively hindered Bitnomial’s ability to list XRP futures. The exchange cites a previous ruling in the SEC’s case against Ripple Labs, which found that XRP traded in secondary markets does not qualify as a security. In response to that ruling, the SEC announced plans to appeal, aiming to overturn the decision made by Judge Analisa Torres.
Bitnomial seeks a declaratory judgment affirming that XRP futures are not securities, along with an injunction to prevent the SEC from claiming jurisdiction over these derivatives or pursuing enforcement against the exchange. Within the same timeframe, other entities have also filed legal actions against the SEC regarding similar regulatory concerns, indicating a growing challenge to the agency’s approach to cryptocurrency regulation.
