The definition of the status of three of its created Trusts has been a topic of discussion between Grayscale Investments, a division of the Digital Currency Group (DCG), and the Securities and Exchange Commission of the United States (SEC). According to the reviewed documents, the communication between the regulator and the corporation is ongoing and relates to its three- Horizon (ZEN), ZCash (ZEC), and Stellar Lumens (XLM) Trusts and their security status. The supposed correspondence between the two parties allegedly took place in the months of June and August. On one point, Grayscale acknowledged that the tokens under consideration “may be a security at this time” or “may be treated as a security by the proper body in short to long term.”
In its filings from June and August addressing its ZEC trust, Grayscale said that “workers from the SEC’s Divisions of Corporation Finance and Enforcement have contacted the sponsor regarding the sponsor’s securities law examination of ZEC.”
Responding to the SEC officials is something that the investors are currently doing. The company’s filings for its XLM and ZEN trusts similarly reflect this identical stance or phrasing, with the asset names modified to correspond to each trust.
As the agency works to expand its regulatory control over the larger business, the engagement between the SEC and Grayscale is yet another known instance of involvement or investigation with digital currency platforms. Earlier, SEC categorised nine tokens which are traded on the Coinbase trading platform as securities. This altered the crypto trading company’s story while upholding the assertion that it has always adhered to the requisite asset listing requirements that comply with relevant regulations.
Being targeted by the SEC could not be good for a company initiative since any regulatory action that may follow can be quite expensive. Even though Grayscale is not anticipating a Ripple-related issue, it claimed in its June filing that the SEC has not disclosed the currency’ securities categorization. It’s possible that this issue ultimately affected its choice.