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Grayscale Investments liquidates all of its XRP… while it still can

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Institutional crypto-fund manager Grayscale Investments has begun the dissolution of its XRP Trust in response to the Security and Exchange Commission’s December 2020 lawsuit alleging the XRP token is a security under U.S. law.

According to an announcement published Wednesday, Grayscale decided to dissolve the trust in response to the spate of XRP delistings from major crypto-asset exchanges after the SEC’s complaint was filed. Grayscale concluded:

“It is likely to be increasingly difficult for U.S. investors, including the Trust, to convert XRP to U.S. dollars, and therefore continue the Trust’s operations.”

All XRP held by the trust has already been liquidated, with Grayscale intending to distribute the net cash proceeds to XRP Trust shareholders after deducting expenses. The trust will be terminated following the distribution of said cash.

Despite the SEC’s hardline position on XRP, regulators in other countries are not convinced the token comprises a security.

A January report on cryptocurrency regulation published by the U.K. Treasury classified XRP as an “unregulated token” alongside leading digital assets Bitcoin (BTC) and Ether (ETH), with the Treasury describing unregulated tokens as “neither e-money tokens nor security tokens.”

The report describes XRP primarily as an “exchange token” — a token that is “primarily used as a means of exchange.”

On Wednesday, Japan’s Financial Services Agency told The Block it classifies XRP as a cryptocurrency, not a security.

XRP is currently trading for $0.31 and is down 40% in the past 30 days.



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Regulation

Biden team announces pick to lead SEC

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President-elect Biden’s team recently unveiled additional folks it plans on nominating for various positions after the inauguration on Wednesday. 

One key pick is Gary Gensler as Chairman of the Securities and Exchange Commission, or SEC, according to a statement from Biden’s transition team on Monday. On Jan. 12, Reuters reported on anonymous sourcing forecasting Gensler as Biden’s choice. Today’s statement from the Biden team confirms the President-elect’s expected choice.

“Gary Gensler served as chairman of the U.S. Commodity Futures Trading Commission from 2009 to 2014,” the statement said. Coming immediately after the financial crisis, Gensler’s term at the CFTC saw him enforcing the provisions of the nascent Dodd-Frank Act in commodities markets. 

Formal nomination will have to wait until Biden actually takes office, and will further need confirmation from the U.S. Senate. January run-off elections in Georgia, however, secured the Senate for the Democrats. 

Gensler also taught classes on blockchain and crypto at MIT. Having someone knowledgeable on the crypto and blockchain industry leading the SEC could pave the way for educated regulation and guidelines. The SEC has been critical for its role in regulating the initial coin offering market, which has quieted down significantly since the commission began treating many ICOs as unregistered public securities offerings.