Grayscale says XLM, ZEC and ZEN may be securities after SEC inquiry

In recent filings, the crypto asset management firm has said Stellar (XLM), Zcash (ZEC) and Horizen’s (ZEN) native cryptocurrencies may be securities. Grayscale was responding to questions from the U.S. Securities and Exchange Commission (SEC) regarding the company’s crypto trusts.

Fast facts

• In its filing in August, Grayscale stated for the first time that ZEC, ZEN and XLM “may currently be a security, based on the facts as they exist today,” Coindesk said in a report.

• In its May and June filings, the digital asset manager mentioned that the SEC “has not provided any guidance as to the security status of” the three cryptocurrencies — a line which was omitted from the Aug. 16 filings.

• Grayscale may put its trusts involving these three cryptocurrencies on hold if the SEC determines them to be securities, as the trust business operates under the premise that they are not.

• ZEC, ZEN and XLM account for about US$40 million out of Grayscale approximately US$18.7 billion in assets under management from funds and trusts.

• The ongoing legal battle between Ripple Labs and the SEC also underscores the legal uncertainty surrounding certain cryptocurrencies on whether they should be considered as securities or mere virtual currencies.
• Grayscale’s trusts provide cryptocurrency investment opportunities that investors can purchase with their brokerage accounts.