Grayscale Removes XRP From Its Digital Large Cap Fund

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In Brief
  • Grayscale has decide to remove XRP from its Digital Large Cap fund.

  • This follows the SEC's decisions to press charges against Ripple Labs for the sale of unregistered securities.

  • Grayscale is licensed to sell securities to its customers by the SEC.

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Grayscale, a digital asset management firm with over $10 billion in digital assets under management, has removed XRP from its Digital Large Cap (DLC fund).



The DLC Fund is a weighted fund that rebalances cryptocurrency exposure to the top-performing tokens on a quarterly basis. The news comes from the official Grayscale Twitter account.

Following the quarterly review on December 31, Grayscale has decided to remove XRP from its DLC Fund. It has updated its weightings for the quarter and will not be assigning any other digital asset to take XRP’s place.



A Big Decision From Grayscale

Grayscale is one of the largest holders of cryptocurrency, if not the largest. The firm is an easy vehicle into crypto for institutions and high net worth individuals.

As a fully-regulated and secure platform, Grayscale claims it offers its customers the ability to gain exposure to crypto price volatility without the risks commonly associated with a relatively new financial market.

Grayscale is fully licensed to sell securities, so the decision is likely not based on fear of the Securities and Exchange Commission (SEC) charges brought against Ripple and its executives. It also follows a recent Grayscale decision to sell over a third of its XRP holdings.

Craig Russo, Director of Innovation at Polyient provided some additional commentary for BeInCrypto:

“With the removal of XRP from most major cryptocurrency exchanges with United States users, we believe that there will be substantial capital outflows into Bitcoin and Ether. Ultimately, this should add further fuel to the ongoing rally.”

What is Happening With Ripple and XRP?

A few weeks ago, the SEC officially announced that it would be pressing charges against Ripple Labs and two of its executives for the unlicensed sale of securities.

The SEC alleges that XRP, the native cryptocurrency of the Ripple network, is a security, and therefore Ripple Labs and its executives are responsible for adhering to securities regulations.

The announcement sent a shockwave through the Ripple community, causing the cryptocurrency to lose over 50% of its market cap. XRP briefly lost its fourth position to Litecoin on Tuesday, 4 Jan.

Ripple Labs and its executives assert that XRP is not a security but is a currency and tradable asset in the same way as bitcoin and ether. The SEC has previously clarified its position on bitcoin and ether, claiming neither are a security. It has, so far, not made any official announcement on other cryptocurrencies.

For most cryptocurrency projects headquartered in the US, the creators work closely with the SEC to ensure they follow all regulatory standards (even if the native currency isn’t considered a security).

For Ripple, this was not the case, and now the company, its investors, and all its XRP token holders are suffering the consequences seven years after the network’s inception.

Disclaimer

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Harrison is an analyst, reporter, and lead specialist at BeInCrypto based out of Tel Aviv, Israel. Harrison has been involved in the cryptocurrency space since late 2016 and is passionate about decentralized ledger technology and its potential.

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