The recent ruling on Ripple's XRP token benefits Coinbase as it narrows the crypto exchange operator's downside risk, according to JPMorgan.

"The ruling appears on the surface to be a win for Coinbase in its recent lawsuit by the SEC," JPMorgan equity analysts led by Kenneth Worthington wrote in a report on Friday. "We see Coinbase in the best position to benefit from the improved confidence and regulatory clarity given Coinbase's market-leading position and respected reputation in the industry."

Earlier this week, Ripple pocketed partial victory after a federal judge ruled that its XRP token is not a security when sold on the secondary market but is a security when sold to institutional investors. The ruling is favorable for Coinbase since it may be applied to the 13 tokens actively traded on Coinbase that the United States Securities and Exchange Commission alleged are securities in its lawsuit against the company last month, according to JPMorgan analysts.

"If the Ripple case stands, it would appear more challenging for the SEC to demonstrate the 13 [tokens] are securities and that Coinbase is an unregistered securities exchange thus excusing it from certain future licensing and regulatory requirements," the analysts wrote.

While the Ripple ruling narrows downside risk for Coinbase, it does not offer significant incremental upside for the company, according to the analysts. That is because Coinbase's staking and wallet products are also part of the SEC lawsuit, and thus, it would appear that "Coinbase is not 'out of the woods' completely just yet," they noted. "Furthermore, the SEC can appeal the Ripple decision furthering the uncertainty of the implications of the Ripple judgement." JPMorgan has a neutral rating on Coinbase, per the report.

Overall, JPMorgan analysts "remain bullish on the cryptoecosystem longer term," and they are "encouraged by some certainty from this ruling that contributes to the mosaic of the U.S. regulatory crypto landscape."