Grayscale, revealing SEC queries, say cryptocurrencies XLM, ZEC, and ZEN Securities are possible

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Last Updated on August 28, 2022 by Bitfinsider

Grayscale Investments LLC has been questioned by the Securities and Exchange Commission (SEC) about its “securities law analysis” of tokens in some of its less-popular crypto trusts.


The investigation, which Grayscale disclosed in unnoticed filings in June and mid-August, casts doubt on the trusts’ viability at a time when the world’s largest digital asset manager is already dealing with a precipitous decline in the value of its assets due to the ongoing crypto winter.

The disclosures appear in trust filings for Stellar (XLM), Zcash (ZEC), and Horizen (ZEN) blockchain native cryptocurrencies. Grayscale stated in the filings that it was “responding” to SEC staff from the Division of Corporate Finance as well as Enforcement, the investigations wing that recently doubled down on crypto policing.

The SEC’s inquiries cast doubt on Grayscale’s portfolio of brokerage account-friendly crypto trusts. It also speaks to an increasingly aggressive regulator intent on cracking down on tokens that it believes should be subject to US securities law.

Grayscale presents crypto trusts to traditional investors as a simple way to invest in cryptocurrency tokens alongside stocks and bonds.


ZEC, ZEN, and XLM account for only $40 million of Grayscale’s roughly $18.7 billion in assets under management from funds and trusts, making them minor outposts in an empire that was once much larger. Grayscale was valued at around $60 billion at the time of the market peak in November of last year, before plummeting along with the rest of the crypto markets.

Though these are minor trusts, any uncertainty about their legal status – specifically, whether they are securities – heightens the stakes of Grayscale’s regulatory gamble. Its trust business assumes these cryptos are not securities; if it finds otherwise, it may have to close the trusts, according to the filings.


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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.


Hardware wallets are safe and secure devices that can be used offline. They keep your cryptocurrency offline, making it impossible for you to be hacked. To find out more on the leading hardware wallets, you may view our reviews here: Ledger & Trezor
Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.

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