Bitnomial Exchange Officially Files with the CFTC to Launch XRP Futures Contracts, Which Will Lead to XRP Spot ETF Launches

This move, while significant on its own, represents an essential first step toward the potential launch of a spot XRP ETF.

Crypto derivatives exchange Bitnomial Exchange has filed with the Commodity Futures Trading Commission (CFTC) to launch XRP Futures Contracts on the U.S. Dollar (XUS).

This move brings XRP one step closer to having a spot ETF. Judge Analisa Torres ruled last year that XRP is not a security, and the final ruling in the Ripple v. SEC case came out less than a week ago.

Overview of XRP Futures Contracts from Bitnomial

Bitnomial submitted the filing to the CFTC on Aug. 9, two days after the SEC lawsuit ended. The exchange self-certified its intention to list XRP Futures contracts on XUS.

According to the filing, the exchange plans to begin trading these contracts on Aug. 13, 2024.

The XRP Futures will be physically settled, margined contracts based on the value of 100,000 XRP. The contracts will be traded and settled in U.S. dollars.

These contracts will adhere to several core principles set by the CFTC, including ensuring transparency and protecting market participants.

The filing also provides a detailed overview of the current XRP market. Notably, XRP, the native token of the XRP Ledger, has a circulating supply of about 60.86 billion tokens out of a maximum supply of 100 billion tokens.

Of the remaining tokens, 39.1 billion XRP are in Ripple’s escrow.

Top digital asset by 24-hour trading volume, XRP ranks eighth overall.

In a historical snapshot, Bitnomial Exchange showed that the average monthly trading volume for the XRP-USD pair stands at over 85 billion XRP.

Futures Contract Specifications and Position Limits

It’s important to note that Bitnomial’s XRP Futures Contracts come with safeguards to prevent market manipulation and ensure orderly trading.

The exchange has proposed a monthly position limit of 300 million XRP, which equates to 3,000 XRP futures contracts.

This position limit is roughly equivalent to the amount of XRP that Ripple releases from its monthly escrow—a detail that has significant implications for the market.

Interestingly, attorney Bill Morgan pointed out that the 300 million XRP position limit mirrors the amount Ripple typically uses from its monthly escrow releases in his reaction to Bitnomial’s filing.

It is interesting to consider some information disclosed by Bitnomial in its submission to the CFTC for certification of its listing of XUS (XRP USD Futures).

On average the monthly XRP trade is over 85 billion on XRP cash markets.

Bitnomial proposes a spot month position limit… pic.twitter.com/uEwJak0zlA

— bill morgan (@Belisarius2020) August 14, 2024

This fact will help to counter the persistent “Ripple dumps FUD,” which claims that Ripple’s escrow releases contribute to XRP’s underperformance in the market, according to Morgan.

Bitnomial’s filing also outlines the exchange’s adherence to several core principles mandated by the CFTC.

These principles ensure that XRP Futures Contracts are not easily manipulated and that they follow strict market conduct rules.

The exchange has taken measures to prevent market disruption, including setting position limits, monitoring trading practices, and enforcing disciplinary procedures.

Broader Implications for a Spot XRP ETF

Although Bitnomial’s filing does not directly indicate the launch of a spot XRP ETF, it is a critical step in that direction.

Before approving applications for spot ETFs, the U.S. Securities and Exchange Commission (SEC) usually looks for the existence of futures contracts.

As a result, the successful launch and operation of XRP Futures Contracts could pave the way for future ETF issuers to apply for the launch of an XRP spot ETF.

The eventual launch of a spot XRP ETF has been anticipated by industry leaders like Ripple CEO Brad Garlinghouse.

This move by Bitnomial is consistent with the increasing institutional interest in crypto assets.

Bitnomial procured a U.S. clearinghouse license last December, making it the first American crypto firm to secure a complete set of broker, derivatives exchange, and clearinghouse licenses.

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