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Bank of America (BAC) emphasized the significance of a comprehensive regulatory framework in its research report released on Friday, stating that it plays a pivotal role in facilitating the widespread adoption of digital assets and encouraging institutional involvement.
Nevertheless, according to the bank, a recent ruling by a U.S. court against the Securities and Exchange Commission (SEC) in their lawsuit against Ripple Labs does not provide much clarity on the matter. Despite the digital asset industry's positive reception of the decision, the bank stated that "Ripple's XRP offerings were unique," making it challenging to ascertain the full implications of the court's rulings.
Ripple achieved a significant triumph recently when the U.S. District Court of the Southern District of New York ruled earlier this month that the sale of its XRP token on exchanges and through algorithms did not fall under the category of investment contracts. Nonetheless, the court did find that the institutional sale of the tokens violated federal securities laws.
“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 primarily because an initial unregistered offering and sale to institutional investors had already occurred that created a market,” analysts Alkesh Shah and Andrew Moss wrote.
Bank of America maintains a clear distinction between the trading of blockchain-native crypto tokens, which are still subject to evolving regulations, and the trading of tokenized traditional assets such as exchange-traded funds (ETFs), repos, and gold. The latter category benefits from well-established rules and has already witnessed trading volumes reaching trillions of dollars.
The court's decision was viewed favorably by rival broker Needham, who believes it will provide a moderate reduction in regulatory pressure on crypto exchange Coinbase (COIN).
