Bank of America Says Ripple-SEC court Ruling Still Leaves Many Uncertainties

San Francisco-based blockchain startup Ripple Labs claimed partial victory earlier this month with the court ruling that the programmatic sales of the XRP don’t constitute as securities.

While the crypto community celebrated Ripple’s victory, Bank of America said that there’s not enough clarity regarding the current development and what it actually means for the future of the crypto industry.

In its research report last Friday, Bank of America noted that a comprehensive regulatory framework is essential for the mainstream adoption of digital assets as well as institutionnel engagement. But the bank added that the court’s ruling in the Ripple vs SEC case does little to bring clarity to the situation. “Ripple’s XRP offerings were unique” and “implications of the rulings are difficult to determine” noted the bank.

Earlier this month, Ripple achieved a partial victory in the case when the U.S. District Court of the Southern District of New York ruled that selling its XRP token on exchanges and through algorithms did not count as investment contracts. However, the court found that the institutional sale of the tokens violated federal securities laws.

Bank of America analysts Alkesh Shah and Andrew Moss wrote: “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”.

Bank of America says they still treat the trading of blockchain-native crypto tokens differently from the trading of tokenized traditional assets like ETFs, repos, and gold. Regulations for blockchain-native crypto tokens are still being worked out, while the rules for tokenized traditional assets are already established and have large trading volumes.

Soon after the Ripple court ruling, the company’s general counsel said that Ripple might start talking with US banks and other financial institutions for the use of its on-demand liquidity product (ODL) using XRP for instant cross-border settlements.

Alderoty said: “Hopefully this quarter will generate a lot of conversations in the United States with customers, and hopefully some of those conversations will actually turn into real business”.

However, it is important to see whether banks and top financial institutions are willing to engage with Ripple considering the uncertainties over the matter. However, top crypto exchanges like Coinbase have already started trading XRP after the court ruling.