Ripple scored a partial win in the case earlier in July when a U.S. court ruled that the sale of its XRP token on exchanges and through algorithms did not comprise investment contracts
A detailed regulatory framework is vital for mainstream adoption of digital assets and institutional engagement, Bank of America (BoA) stated in a research report on Friday.
However, a U.S. court’s recent ruling against the U.S. Securities and Exchange Commission (SEC) in its lawsuit against Ripple Labs does little to elucidate the situation, the bank further said in the report. While the digital asset sector cheered the decision, Ripple’s XRP offerings were distinct and effects of the rulings are hard to ascertain.
Ripple scored a partial win in the case earlier in July when the U.S. District Court of the Southern District of New York ruled that the sale of its XRP token on exchanges and via algorithms did not comprise investment contracts. Nevertheless, the institutional sale of the tokens did infringe federal securities laws, the court added.
The judge ruled that Ripple’s programmatic sale of XRP on digital asset exchanges did not constitute an unregistered offer and sale of investment contracts, but basically because an initial unregistered offering and sale to institutional investors had already taken place that created a market, experts Alkesh Shah and Andrew Moss stated.
Bank of America states that it continues to distinguish between the trading of blockchain-native crypto tokens, for which regulations are still being set, and the trading of tokenized conventional assets including exchange-traded-funds (ETFs), repos and gold, for which the rules are already set and trading volumes have already hit trillions of dollars.
Rival broker Needham stated the court’s ruling was positive for crypto exchange Coinbase (COIN), as it should somewhat de-risk the regulatory pressure on the stock.