A comprehensive regulatory framework is critical to the mainstream adoption of digital assets and institutional interactions, Bank of America (BAC) said in a research report on Friday.
However, the bank said the recent US court ruling against the Securities and Exchange Commission (SEC) in its lawsuit against Ripple Labs does not clarify the situation. While the digital asset industry welcomed the decision, “Ripple’s XRP offerings were unique” and “the implications of the rulings are difficult to determine.”
Ripple won a partial victory in the case earlier this month when the US District Court for the Southern District of New York ruled that the sale of XRP tokens on exchanges and algorithms are not investment contracts. However, the court held that the institutional sale of the tokens was a violation of federal securities laws.
“The judge ruled that Ripple’s programmatic sale of XRP to digital asset exchanges did not constitute an unregistered offer and sale of investment contracts, but created a market primarily because an unregistered initial offer and sale to institutional investors had already taken place,” analysts Alkesh Shah and Andrew Moss wrote.
Bank of America says it continues to differentiate between the trading of blockchain-native crypto tokens, for which regulations are still being established, and the trading of tokenized traditional assets, including exchange-traded funds (ETFs), repos and gold.