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Grayscale Document Unveil The SEC Dispute on Altcoin Security Status

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  • As per the Grayscale document, three altcoins may be securities.
  • All three altcoin may account for around $40 million of Grayscale holding in assets.

Grayscale, a crypto investment firm filed documents for native cryptocurrencies of Stellar (XLM), Zcash (ZEC), and Horizen (ZEN) blockchains in June and mid of August 2022.

Grayscale’s Filing Over The SEC

In the second filing by Grayscale, the query raised by the corporate finance department of Securities and Exchange Commision (SEC) on Grayscale’s analysis. The analysis by Grayscale was done on the altcoins as per the existing security laws.

In the filing, it highlights the new trusts because the downtrend of the crypto market affects the other trusts of Grayscale. It gives easy exposure to cryptocurrencies investors along with the stocks and bonds. Its Bitcoin and Ethereum trust holds around billions of dollars in BTC and ETH, while the question remains at its $40 million for the altcoins holdings.

When the crypto market hits the peak with BTC hike $69,000, the firm holds around $60 billion in assets.

As per the August filing, the firm came to a point that three altcoins may be securities. It takes the reference on June filing, that further shows altcoins were not securities but in future it can be considered. While the SEC has not provided any guidance to that effect.

Grayscale is holding a small portion of its crypto holdings, and it is possible that it could be pushed to retire its major trusts.

On the other hand, SEC turns towards that Grayscale pushes to regulate in crypto space. A little consensus in the U.S. is that crypto may be securities and that’s why it comes under the jurisdiction of the SEC.

However, in June, SEC directed that the NYSE Arca platform would list the ETF opened to manipulate the market. Against that, the senior legal strategist Donald B. Verrilli Jr. filed a petition in the U.S. court. It includes an appeal for the District of Columbia Circuit to challenge the SEC decision.

There may be a chance that Grayscale may receive a ruling from the courts in the third quarter of 2023 or in early 2024.

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