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Grayscale discontinues its XRP fund

Photo of: Nathan VDH
by Nathan VDH

Following the liquidation of the XRP within its Digital Large Cap Fund, Grayscale Investments begins the dissolution of its Ripple Token Fund. The proceeds of the sale will be returned to investors in the form of cash.
Grayscale, the giant in crypto-asset management for institutional investors, is pessimistic about the future of XRP. A week earlier, the token came out of its Digital Large Cap Fund. It previously contained 1.46% XRP, along with other cryptocurrencies.

Now it is the XRP fund that is disappearing. On January 13, Grayscale announced the liquidation of the XRP Trust. On December 21, the trust had total assets of 11.3 million dollars.

As for the justification for this radical decision, it remains the same: the threat hanging over Ripple’s token. The SEC, in its complaint last month, considers the token a financial security. Its creator is therefore guilty of issuing securities without authorization.

For Grayscale, the legal uncertainty weighs heavily on the value of the XRP and its liquidity. “It is likely to become increasingly difficult for US investors, including the Trust, to convert XRP into US dollars, and thus to continue the Trust’s operations,” the firm says.

As a result, Grayscale proceeded to sell all of the XRP in its fund. The Asset Manager announces that it will distribute cash to the shareholders of the XRP Trust from the proceeds of their sale. However, it will deduct its expenses from this amount.

The SEC’s position with respect to XRP therefore continues to weigh heavily on assets, and not only in the United States. This week, Revolut warned its clients that it could suspend the purchase and sale of XRP in the near future. The reason for this was the lack of liquidity.

However, the status of the token may still change. It will indeed be up to the courts to decide. Moreover, the management of the SEC is in the process of being completely renewed. The main actor in the complaint against Ripple, Marc P. Berger, is leaving his position.

It should also be noted that there is no consensus in the world on the legal nature of the XRP. For the British Treasury, XRP belongs to the same category as Bitcoin and Ether. It is an unregulated token.

The United Kingdom clearly believes, in a January report of the regulator, that it is neither a currency nor a security, but mainly a token of exchange. The Japanese financial regulator specifies to The Block that XRP falls into the category of cryptocurrencies.