VanEck advises RIAs on handling token security, citing the SEC vs. Ripple case in their publication.
In a recent publication, the prominent US asset manager VanEck offered insights to Registered Investment Advisors (RIAs) regarding the regulatory status of tokens within the crypto market, particularly citing the SEC vs. Ripple case.
Sea change: The global investment manager Van Eck is advising Registered Investment Advisors that tokens are not securities if purchased in blind/bid tx's like #XRP in the #Ripple v SEC case.https://t.co/enfcmRwzrB pic.twitter.com/cT6zgUMRbA
— WrathofKahneman ? (@WKahneman) October 10, 2023
The publication “The Future of Finance: RIAs’ Burning Questions on Crypto” offered answers to frequently asked digital asset-related questions.
VanEck noted that the need to publish the crypto FAQ for RIAs comes amid an era of exceptional wealth transfer and growing enthusiasm among young crypto investors. The US-based asset manager stated this era posed advisors like RIAs with numerous unknowns as they navigate the evolving landscape.
How RIAs Should Address Tokens Deemed Security
One of the concerns VanEck addressed in the Crypto FAQ for RIAs is the classification of tokens as securities. VanEck referenced the ongoing Ripple Labs vs. SEC case to answer the concern. The firm highlighted that, at the moment, programmatic, secondary sales of tokens are not securities, according to the US court.
VanEck believes the Ripple case is a preliminary reference for understanding how tokens traded in blind bid/ask trades on exchanges and DeFi protocols are perceived legally. Yet, the firm stressed that the perception is subject to change given that the case is still under trial.
On the other hand, VanEck noted that if a token is eventually categorized as a security or is designed explicitly for tokenizing securities, it must be placed under qualified custody. Additionally, it stated such would be subject to securities regulations and any compliance conditions stipulated by the custodian.
Moreover, VanEck addressed the issue of managing the risk associated with tokens being deemed securities. It advised RIAs to incorporate qualified crypto custodians into their digital asset onboarding process.
Besides, the asset manager mentioned that this preemptive approach ensures that custody can be seamlessly transferred to the qualified custodian should a token be designated security. Also, the publication suggested standards for determining whether a token should be held in custody.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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