As a seasoned researcher with a background in both traditional finance and cryptocurrencies, I find this development to be a significant step forward for the XRP ecosystem within the United States. My years of following the complexities of regulatory approvals have taught me that every small victory is a testament to the resilience and adaptability of the industry.
In an under-the-radar development, Bitnomial Exchange, LLC, has announced the creation of a new futures contract for XRP with the Commodity Futures Trading Commission (CFTC) on August 9. These XRP US Dollar Futures contracts, known as XUS, were initially planned to commence trading on August 13, 2024, but at present, no such futures are visible on their official website. Interestingly, this self-certification could potentially clear the path for the acceptance of a spot Exchange-Traded Fund (ETF) in the United States.
The XUS contract is a type of future contract that will be settled physically with 100,000 units of Ripple (XRP). In their official statement, Bitnomial detailed the design and regulatory measures for these futures contracts, focusing on conforming to several key principles set by the Commodity Futures Trading Commission (CFTC). These principles cover essential aspects like market manipulation, trading behavior, potential market disruptions, and financial honesty.
In their compliance paperwork, Bitnomial confirmed that their XUS contract listing rules align with the Commodity Exchange Act and the regulations issued by the commission. This alignment is significant as it addresses ongoing worries about the market’s stability and dependability in the realm of cryptocurrencies.
Additionally, it’s worth noting that Bitnomial gained backing from both market participants and clearing members. As stated in the filing, “The Exchange has communicated with Clearing Members and market participants expressing their support for the initiative to introduce XRP US Dollar Futures contracts. At present, The Exchange has not encountered any significant objections to these Contracts.”
Implications For A US Spot XRP ETF
The importance of Bitnomial’s action is heightened by its possible influence on the US Securities and Exchange Commission (SEC) position regarding a traditional Bitcoin-based Exchange-Traded Fund (ETF). For years, the SEC has been reluctant to endorse spot crypto ETFs, especially those involving Bitcoin, mainly due to worries about market manipulation and fraud within the underlying markets.
As a crypto investor, I understand that for Exchange-Traded Funds (ETFs) related to cryptocurrencies to be approved by the SEC, there must exist a substantial and well-regulated futures market. This means a market large enough to guarantee effective monitoring and safeguard against potential fraud and manipulation in the spot markets where actual cryptocurrency transactions occur.
In the Grayscale case, the court decision overruled the SEC’s position, as it found fault with the SEC for not providing clear reasons for distinguishing between spot and futures Exchange Traded Funds (ETFs), both of which are based on the same underlying asset. This critique has sparked debate among experts, who believe that the SEC might be compelled to endorse spot Bitcoin ETFs in the near future, given that futures-based ones have already been approved.
The news has been warmly received by the community as they view it as a significant step forward in the potential future approval of a spot ETF for the US. Chad Steingraber, a community participant, expressed his thoughts saying, “Futures Contracts mark the beginning of an XRP ETF; it’s only a matter of time.”
Yassin Mobarak, the founder of Dizer Capital, shared similar thoughts, labeling it as “A hint at an upcoming XRP Spot ETF.” Good Morning Crypto (@AbsGMCrypto) further commented, “This could be a significant stride towards the launch of an XRP ETF in the United States.”
Renowned ETF expert Nate Geraci who is the host of ETF Prime podcast and co-founder of the ETF Institute, posted a Trump meme, saying “Me refreshing SEC website waiting for XRP ETF filing…”
Me refreshing SEC website waiting for XRP ETF filing…
— Nate Geraci (@NateGeraci) August 14, 2024
At press time, XRP traded at $0.5773.
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2024-08-14 16:34