Crypto derivatives platform Bitnomial has sued the United States Securities and Exchange Commission over its claim that XRP futures are securities and subject to the agency’s jurisdiction.

In an Oct. 10 lawsuit filed with an Illinois federal court, Bitnomial alleges that the SEC has overextended its jurisdiction by claiming that XRP futures contracts are security futures. 

The firm claims that the SEC is asserting its jurisdiction over a product “that is already regulated by and subject to the exclusive jurisdiction of the Commodity Futures Trading Commission.” As such, the agency’s interference duplicates and “compounds” the regulatory burden on Bitnomial.

Per the filing, Bitnomial filed a self-certification with the CFTC in August, intending to list XRP futures contracts on its exchange. However, the SEC contacted Bitnomial after the filing, claiming that XRP futures are securities and that the exchange must register as a national securities exchange before offering such products.

“The SEC has effectively blocked Bitnomial from listing XRP futures,” the filing reads.

Bitnomial argues that it cannot comply with the SEC’s requirements because XRP, as the underlying asset, is not registered as a security, and the exchange does not have the power to register it.

Further, the derivatives platform pointed to the July 2023 ruling by New York District Court Judge Analisa Torres, which concluded that while institutional sales of XRP were considered securities transactions, the token’s sales on secondary markets were not.

Bitnomial referenced this court decision in its lawsuit, arguing that the SEC’s position on XRP had already been challenged and partly rejected in court. It is currently seeking a court declaration that XRP futures are not securities and an injunction preventing the SEC from enforcing its regulations on the contracts.

Yet, the SEC has maintained that XRP is a security, arguing that Ripple’s sales of the digital asset should fall under securities regulations. On Oct. 2, the SEC announced it would appeal Judge Torres’ ruling.

Ripple, has contested the SEC’s stance and countered with a cross-appeal. The company previously agreed to pay a $125 million penalty to settle the initial case, but the final resolution remains pending due to the SEC’s appeal.

The SEC’s enforcement actions over the past years have faced industry-wide criticism, with market participants arguing that the agency is overreaching its authority by classifying most digital assets as securities.

Blockchain payments firm Ripple has disclosed plans to bring smart contracts to the XRP Ledger mainnet, enhancing programmability and enabling developers to create customized applications.

In a Sep. 2 announcement, Ripple revealed it is working to introduce smart contracts to the XRP Ledger mainnet, aiming to expand its layer-1 functionality and attract more developers to the ecosystem. The XRP Ledger, launched in 2012, has been primarily leveraged by banks and financial institutions to facilitate cross-border payments.

Smart contracts are self-executing agreements in which the terms of the agreement are written into code. The upcoming smart contract functionality will build upon existing standards like Hooks.  

On XRPL, smart contracts are expected to enhance the platform’s flexibility by allowing developers to creatively utilize its foundational components—like escrows, NFTs, trust lines, payment channels, and decentralized exchange features—to build new decentralized applications.

Further, the announcement adds that developers can deploy smart contracts without a formal amendment process or requiring any approval. However, an XLS standard would be implemented to ensure that smart contracts are secure, efficient, and easy to deploy.

According to Ripple CEO Brad Garlinghouse, the programmability of the XRP Ledger is “something the XRP community has rightly been asking for.”

XRPL eyeing EVM support via sidechains 

Ripple also expects to deploy the XRPL EVM Sidechain early next year in collaboration with blockchain infrastructure provider Peersyst. The sidechain would allow XRPL developers to use Ethereum Virtual Machine tools and programming languages.

As previously reported by crypto.news, the XRPL EVM will leverage Axelar’s cross-chain bridge to enable transactions between the XRPL EVM Sidechain, the XRP Ledger, and over 55 other blockchains via wrapped XRP (eXRP), which would also serve as the gas token for sidechain.

Ripple has previously partnered with Cosmos-based evmOS, an XRPL sidechain that is also EVM compatible,

The recent development follows the introduction of Ripple’s fiat-pegged stablecoin, Ripple USD (RLUSD), which began beta testing on the XRP Ledger and Ethereum mainnet earlier this year. RLUSD is designed to maintain a 1:1 value with the US dollar, backed by a reserve of cash and cash equivalents, and could further boost XRPL’s liquidity.