The Cryptocurrency Derivatives Trading Platform, A U. S. regulated Bitnomial Exchange is seeking approval from the Commodity Futures Trading Commission for the trading of XRP Futures Contracts as a major step towards the possible listing of XRP Spot ETF. This comes in the wake of the judgment by Judge Analisa Torres in late December where she declined to classify XRP as a security, barely two weeks after the Ripple v. SEC trial.
Overview of Bitnomial’s Proposed XRP Futures Contracts
The application by Bitnomial to the CFTC was submitted on August 9, accompanied by self-certification to launch trading contracts realized through XRP Futures measured in the U. S. Dollar (XUS). This came just two days after the resolution of the SEC lawsuit. As stated in the filing, trading of these contracts would begin on the 13th of August, 2024. The XRP Futures will be physically delivered and cleared and will quote in USD with one contract equivalent to 100,000 XRP. Some of the most important regulations set forth by the CFTC that concern the exchange include transparency and protection of those participating in the market.
The submission also details the current dynamics within the XRP market. XRP, the native currency of the XRP Ledger, has a circulating supply of approximately 60.86 billion tokens out of a total cap of 100 billion. Of the unsold tokens, 39.1 billion XRP are held in escrow by Ripple.
Positioned as one of the most liquid digital assets, XRP currently ranks eighth in terms of 24-hour trading volume across all cryptocurrencies. Historical data from Bitnomial reveals that the average monthly trading volume for the XRP-USD pairing exceeds 85 billion XRP.
Specifications of Futures Contracts and Position Limits
Bitnomial’s XRP Futures Contracts are constructed with specific rules to mitigate market manipulation and ensure orderly trading procedures.
A proposed monthly position limit of 300 million XRP, equivalent to around 3,000 futures contracts, has been put forth. This limit closely aligns with the quantity of XRP Ripple typically dispenses from its monthly escrow—which holds significant ramifications for the market.
Legal expert Bill Morgan noted that this position limit is the amount that Ripple typically spends out of its escrow, which should dispel claims of “Ripple dumps,” a narrative attributing market woes to Ripple’s escrow losses.
Through the filing, the exchange guarantees compliance with several fundamental principles set forth by the CFTC as a way of preserving the integrity of the XRP Futures Contracts and to curb any form of manipulative activities. Bitnomial proves its lack of interest in causing market disruption through applying position limits, watching trading actions, and following the rules.
Wider Implications for a Spot XRP ETF
While Bitnomial’s filing does not explicitly pave the way for a spot XRP ETF, it is a crucial progression toward such a possibility. The U.S. Securities and Exchange Commission (SEC) typically seeks the establishment of futures contracts as a prerequisite for approving spot ETF proposals.
Thus, the successful implementation and execution of XRP Futures Contracts may set the stage for future ETF innovators to consider launching an XRP spot ETF. Ripple’s CEO, Brad Garlinghouse, is among industry leaders expressing optimism regarding the eventual development of a spot XRP ETF.
Bitnomial’s initiative is in line with a growing trend of institutional interest in cryptocurrency assets. Last December, the exchange secured a U.S. clearinghouse license, becoming the first American crypto enterprise to obtain a comprehensive suite of licenses for brokerage, derivatives exchange, and clearinghouse operations.
