Grayscale is facing SEC scrutiny over whether Stellar (XLM), Zcash (ZEC), and Horizen (ZEN) tokens are securities, with the asset manager shifting its legal stance in recent filings to acknowledge these assets may currently qualify as securities under federal law.
Grayscale Investments disclosed in SEC filings from June and August that it is responding to inquiries from the SEC's Division of Corporate Finance and Enforcement regarding the securities law classification of tokens in its Stellar (XLM), Zcash (ZEC), and Horizen (ZEN) trusts. The company significantly shifted its position between filings, initially suggesting these tokens might be deemed securities in the future, then acknowledging in August that they may currently be securities based on existing facts. The SEC has not provided explicit guidance on the tokens' status, but Grayscale received a memorandum from external securities counsel on the matter. If the SEC determines these tokens are securities, Grayscale may be forced to shut down the trusts, which collectively hold only $40 million of the firm's $18.7 billion in assets under management.