Analysts React To XRP's Landmark Win Against SEC, But Is A Crypto Rally Justified?

Zinger Key Points
  • Court's decision undermines SEC's position on digital assets.
  • SEC still has a case against Coinbase.

Broker Bernstein highlighted that while the U.S. district court found institutional sales of Ripple's XRP/USD token to be in violation of securities law, the fact that it's not considered a security when sold through exchanges or programmatic sales is a major victory for the crypto industry.

Other observers, including analysts at Gautam Chhugani, noted that the recent ruling alleviates the "securities overhang on tokens sold on exchanges," and provides "major relief for all tokens sold on secondary platforms."

The court's decision underscores the necessity for a distinct digital assets framework.

See Also: Bitcoin Offshoot Creator Craig Wright Attacks Ripple CEO

The ruling also suggests that the "Howey test cannot be straight applied to tokens on exchange platforms, and thus the context of the transaction matters," Coindesk reported.

This interpretation weakens the U.S. Securities and Exchange Commission’s (SEC) position that securities law is clear, and no separate clarity is needed for digital assets.

Crypto Rally: Prices of crypto-related tickers spiked after the Ripple ruling. But even as the shares of Coinbase COIN surged over 24% on Thursday, Berenberg cautioned that the extent of the rally might not be justified.

Also Read: Metaverse Could Be Used To Brainwash Youth And Train Recruits For Terrorism, Says India's Home Minister

Analysts, including Mark Palmer, pointed out that the court's ruling did not specifically reject the SEC's argument that many tokens bought and sold on secondary-market transactions on Coinbase's exchange are unregistered securities.

The SEC has accused Coinbase of operating as an unregistered broker, exchange, and clearing agency simultaneously, violating federal securities law.

Berenberg also noted that the court's decision that XRP is not a security on its own is "immaterial in the context of COIN."

Read Next: Celsius CEO Arrested In Wake Of Crypto Lender's Collapse, SEC Files Securities Fraud Lawsuit

Join Benzinga's Future of Crypto in NYC on Nov. 14, 2023 to stay updated on trends like AI, regulations, SEC actions & institutional adoption in the crypto space. Secure early bird discounted tickets now!

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: CryptocurrencyNewsTop StoriesMarketsBernsteincrypto exchangeCrypto industrycrypto tradingDigital Assets FrameworkHowey TestInstitutional SalesSecurities LawU.S. District Court RulingU.S. Securities and Exchange Commission
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!