Anika Begay
In news that went largely unnoticed, Bitnomial Exchange, LLC, self-certified a new XRP futures contract with the Commodity Futures Trading Commission (CFTC) on August 9. The XRP US Dollar Futures, or XUS, contracts were supposed to begin trading yesterday, August 13, 2024. However, the official website did not display any XRP Futures at press time. Notably, this certification could pave the way for a spot ETF to be approved in the United States.
The XUS contract will be a physically settled futures contract involving 100,000 units of XRP. In the official documentation, Bitnomial outlined the structure and compliance measures associated with these futures, emphasizing adherence to multiple core principles established by the CFTC. These principles address critical areas such as market manipulation, trading practices, market disruptions, and financial integrity.
In its compliance filing, Bitnomial stated, “Bitnomial has determined that its rules relating to the listing of XUS contracts are in compliance with the requirements of the Commodity Exchange Act and the rules and regulations promulgated thereunder by the Commission.” This compliance is critical to addressing long-standing concerns about the stability and reliability of cryptocurrency markets.
Additionally, Bitnomial has received support from market participants and clearing members. The filing states: “The Exchange has spoken with clearing members and market participants who support the decision to launch XRP US Dollar Futures Contracts. The Exchange is not aware of any materially adverse views to the Contracts.”
Implications for a US Spot XRP ETF
The significance of Bitnomial’s move is amplified by its potential impact on the U.S. Securities and Exchange Commission’s (SEC) stance on spot exchange-traded funds (ETFs). The SEC has long been hesitant to approve spot cryptocurrency ETFs, particularly those based on Bitcoin, primarily due to concerns about market manipulation and fraud in the underlying markets.
A key requirement that the SEC has insisted on for approval of these ETFs is the presence of a “futures market of significant size.” This term refers to a futures market that is large enough and regulated enough to provide adequate oversight and protection against potential fraud and manipulation in the spot markets.
The SEC’s position was reversed with the court’s ruling in the Grayscale case, which criticized the SEC for failing to adequately explain why it treats spot and futures ETFs differently when both are based on the same underlying asset. As a result, experts say the SEC may soon have to approve spot crypto ETFs, when there are already approved futures-based ones.
For this reason, the community has responded enthusiastically to this news, perceiving it as a major step forward towards the eventual approval of a spot ETF in the United States. Chad Steingraber, an active member of the community, noted: “Futures contracts are the first steps towards an XRP ETF. ‘Inevitable.'”
Yassin Mobarak, founder of Dizer Capital, expressed similar sentiments, calling the development “a prelude to a spot XRP ETF.” Good Morning Crypto (@AbsGMCrypto) added, “a huge step towards launching an XRP ETF in the US.”
Renowned ETF expert Nate Geraci, host of the ETF Prime podcast and co-founder of the ETF Institute, posted a meme about Trump, saying, “I’m refreshing the SEC website in anticipation of the XRP ETF filing…”
I am updating the SEC website in anticipation of the XRP ETF filing… photo.twitter.com/xK0N6XfOr3
— Nate Geraci (@NateGeraci) August 14, 2024
At press time, XRP was trading at $0.5773.
Featured image created with DALL.E, chart from TradingView.com
