In news that has gone largely unnoticed, Bitnomial Exchange, LLC, self-certified a new futures contract for XRP with the Commodity Futures Trading Commission (CFTC) on August 9. XRP futures contracts in US dollars, or XUS, were set to begin trading yesterday, August 13, 2024. However, the official website did not display any XRP futures contracts at press time. Notably, this certification could pave the way for the approval of a spot ETF in the United States.
The XUS contract will be a physically settled futures contract, covering 100,000 units of XRP. In the official filing, Bitnomial outlined the structure and compliance measures associated with these futures contracts, with a focus on adhering to several core principles set out by the CFTC. These principles address critical areas such as market manipulation, trading practices, market disruption, and financial integrity.
In the compliance documentation, Bitnomial stated: “Bitnomial has determined that its rules relating to the listing of XUS contracts comply with the requirements of the Commodity Exchange Act and the rules and regulations promulgated by the Commission thereunder.” This compliance is essential 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 engaged with clearing members and market participants who support the decision to launch U.S. dollar XRP futures contracts. The Exchange is not aware of any substantive opposing views on the contracts.”
Implications for a US Spot XRP ETF
The significance of Bitnomial’s decision is amplified by its potential impact on the U.S. Securities and Exchange Commission’s (SEC) stance on a cash exchange-traded fund (ETF). The SEC has long been hesitant to approve cash crypto ETFs, particularly those based on Bitcoin, largely due to concerns about market manipulation and fraud in the underlying markets.
One of the key conditions the SEC has insisted on in approving these ETFs is the presence of a “significant futures market.” This term refers to a futures market that is large and regulated enough to provide adequate oversight and protection against potential fraud and manipulation in the cash markets.
The SEC’s position was reversed by the court’s decision 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 believe the SEC may soon have to approve crypto spot ETFs, while there are already approved futures ETFs.
That’s why the community has reacted enthusiastically to this news, seeing it as a crucial step towards the eventual approval of a spot ETF in the United States. Chad Steingraber, an active member of the community, said: “Futures are the first steps towards an XRP ETF. ‘Inevitable.’”
Yassin Mobarak, founder of Dizer Capital, expressed similar sentiments, calling the development “a prelude to an XRP Spot ETF.” Good Morning Crypto (@AbsGMCrypto) added, “a big 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 while waiting for the XRP ETF filing…”
I’m refreshing the SEC website while waiting for the XRP ETF filing… pic.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
