Bank of America said in a July 21 research report that a comprehensive regulatory framework is essential for institutional investor participation and mainstreaming of cryptocurrency adoption.
However, the court ruling in the U.S. Securities and Exchange Commission (SEC) case against Ripple does not clarify the situation, the bank said. The cryptocurrency industry welcomed the ruling, but the bank said that “Ripple’s XRP was unique” and that it was “difficult to judge the impact of the ruling.”
Earlier in July, the US District Court for the Southern District of New York ruled that the sale of XRP through exchanges and algorithms is not an investment contract, a partial victory for Ripple. However, the sale of tokens to institutional investors violates federal securities laws, the court said.
Analysts Alkesh Shah and Andrew Moss wrote, “The judge ruled that Ripple’s programmatic sale of XRP on cryptocurrency exchanges did not constitute an unregistered offering and sale of investment contracts, largely because the first unregistered offering and sale to institutional investors had already taken place and the market had been formed.”
Bank of America said it continues to distinguish between trading blockchain-native tokens, where regulations have not yet been established, and trading traditional tokenized assets such as exchange-traded funds (ETFs), repos, and gold, where “the rules have already been established and trading volumes have already reached trillions of dollars.”
Rival investment bank Needham said the court’s ruling was positive for cryptocurrency exchange Coinbase and should moderately mitigate the risk of regulatory pressure on its shares.
｜Translation: CoinDesk JAPAN
｜Editing: Toshihiko Inoue
| Image: Ripple Labs
｜Original: Implications of Ripple-SEC Court Ruling for Wider Crypto Industry Are Unclear: Bank of America