The U.S. district court ruling that Ripple’s XRP token should not be considered a security if sold via an exchange or through programmatic sales, is a landmark judgment for crypto, said broker Bernstein in a research report Thursday. The court’s decision removes the securities overhang on tokens sold on exchanges, and is a major relief for all tokens sold on secondary platforms, according to the report.
The ruling emphasizes the need for a separate digital assets framework, and given its interpretation it is clear that the Howey test cannot be straight applied to tokens on exchange platforms, and thus the context of the transaction matters, the note said. This weakens the U.S. Securities and Exchange Commission’s (SEC) stance that the securities law is clear and no separate clarity is required for digital assets, given the contextual interpretation required in every case.
Bernstein says this is a landmark judgement and significantly shifts the regulatory cloud over the crypto industry, and it expects institutional investors who have steered clear of digital assets due to regulatory challenges to reconsider the asset class.