Japan’s FSA declares XRP is not a security, while Grayscale dissolves XRP Trust

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According to the Financial Services Agency (FSA), XRP does not meet the definition of a security under Japanese law.
Grayscale dissolves the XRP Trust due to the SEC lawsuit against Ripple.

Besides the Bitcoin price, the SEC lawsuit against Ripple Labs continues to be the defining topic on the crypto market. Hardly a day goes by without news as a result of or in connection with the securities lawsuit. However, as a report from The Block shows, there are still positive headlines for Ripple and XRP.

The top securities regulator in Japan (FSA) has determined that it will not consider XRP a security. The authority thus confirms Yoshitaka Kitao, president and CEO of SBI Holdings, as well as a board member at Ripple Labs, who made this determination shortly after the SEC lawsuit in the US.

As Japan’s Financial Services Agency (FSA) told The Block, it considers XRP “a cryptocurrency based on the definitions of the Payment Services Act.” In addition, agency officials said they “refrain from commenting on the response of other authorities.”

Remarkably, this is the first time the FSA has directly commented on the legal status of XRP. While it has no bearing on the legal status in the U.S., it underscores the lack of consensus among securities regulators worldwide. Just last week, a statement from the U.K. Treasury Department surfaced stating that the agency classifies XRP as an “exchange token,” just like Bitcoin and Ethereum.

Grayscale dissolves its XRP Trust

However, as it also became known yesterday, there is once again bad news from the US. The world’s largest crypto asset manager, Grayscale Investments, announced that it has initiated the dissolution of its XRP Trust. However, the news does not come as a complete surprise either, as Grayscale had already announced the sale of all XRP from its Digital Large Cap Fund a week ago.

The reason given is the indirect consequences of the federal court action filed on December 22 by the SEC, according to which XRP is a “security” under the federal securities laws. Accordingly, Grayscale states in the official press release on the reasons:

In response to the SEC’s action, certain significant market participants have announced measures, including the delisting of XRP from major digital asset trading platforms, resulting in the Sponsor’s conclusion that it is likely to be increasingly difficult for U.S. investors, including the Trust, to convert XRP into U.S. dollars, and therefore continue the Trust’s operations.

In connection with the dissolution, Grayscale has liquidated the Trust’s XRP and intends to distribute the net cash proceeds to Trust shareholders, net of expenses and the establishment of appropriate reserves, and subject to all applicable withholding. Consequently, the XRP Trust will terminate after the distribution of the net cash proceeds.

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