Cryptocurrency exchange Bitnomial has decided to withdraw its lawsuit against the U.S. Securities and Exchange Commission (SEC). The decision comes just before the company’s launch of XRP futures contracts in the United States. Bitnomial said that its XRP futures are regulated by the U.S. Commodity Futures Trading Commission (CFTC) and will be available for trading starting March 20 for existing users.
Why Did Bitnomial Sue the SEC?
Bitnomial first attempted to introduce XRP futures in August 2024 by filing a self-certification with the CFTC. However, the SEC blocked the move and insisted that Bitnomial must register as a securities exchange before offering XRP futures contracts.
In response, Bitnomial sued the SEC and its five commissioners on October 10, 2024. The lawsuit argued that the SEC was overstepping its authority by treating XRP as a security, even though previous court rulings had stated otherwise.
Bitnomial’s lawsuit was part of a larger battle over whether XRP and other cryptocurrencies should be regulated as securities.
Ripple’s legal victory influences SEC’s decision to drop appeal on XRP’s retail sales status
Bitnomial’s decision to launch XRP futures follows Ripple CEO Brad Garlinghouse’s announcement on March 19 that the SEC had dropped its appeal against a court ruling that XRP is not a security for retail sales.
This ruling by Judge Analisa Torres, clarified that XRP does not qualify as a security when sold to the general public. However, the judge also ruled that XRP sales to institutional investors could be classified as securities transactions under the Howey Test, a legal standard used to determine securities.
The SEC had been appealing this decision but has now chosen to withdraw its appeal.
SEC under new leadership rolls back tough crypto policies
The SEC originally sued Ripple Labs in December 2020, accusing the company of selling XRP as an unregistered security. The lawsuit was a key part of the agency’s strict approach to crypto regulation under former SEC Chair Gary Gensler.
However, after Gensler resigned on Jan. 20, the new SEC leadership under acting Chair Mark Uyeda has started rolling back some of the agency’s harsh crypto policies.
Uyeda has also announced plans to scrap a proposed rule from the Biden administration that aimed to tighten crypto custody standards for investment advisers. Additionally, Uyeda had instructed SEC staff to review and potentially abandon proposed regulatory changes that would force crypto firms to register as exchanges under alternative trading system rules.