Grayscale dumps underfire XRP tokens, holds a basket of four digital assets

Grayscale Investments, the world’s biggest cryptocurrency asset manager, has severed ties with the underfire XRP token. The asset manager announced that it has liquidated its XRP holdings and used the funds to buy more digital assets.

Barry Silbert, the founder and CEO of Digital Currency Group (DCG), the parent company of Grayscale, tweeted on Dec. 29 that the asset manager had $19 billion in assets under management (AUM), up from $7.6 billion on Nov. 1.

UPDATED

Grayscale AUM on Nov 1: $7.6 billion
Grayscale AUM today: $19 billion https://t.co/WMNm9bUv5n

— Barry Silbert (@BarrySilbert) December 28, 2020

The liquidation of XRP affects Grayscale’s Digital Large Cape Fund, “a passive, rules-based strategy that seeks to provide exposure to the large-cap segment of the digital assets class.”

“The Fund has removed XRP from the Fund’s portfolio and sold the XRP holdings to purchase additional tokens of the remaining Fund Components in proportion to their respective weightings,” said the company.

The decision to liquidate XRP tokens was made less than a week after Genesis Global, Trading Inc., a participant of the Fund announced that it will suspend the trading and lending of XRP tokens on Jan. 15. 

It is not clear if the enforcement action taken by the U.S. Securities and Exchange Commission (SEC) against Ripple, the company affiliated with the XRP token, prompted Grayscale to remove the token.

Fund rebalancing

Prior to the liquidation on Jan. 4, XRP made up approximately 1.46% of the Fund. The re-weighted Fund consists of 81.6% Bitcoin (BTC), 15.9% Ethereum (ETH), 1.4% Litecoin (LTC), and 1.1% Bitcoin Cash (BCH). Each share of the Fund represented  0.00047489 Bitcoin (BTC), 0.00287011 Ethereum (ETH), 0.00047537 Bitcoin Cash (BCH), and 0.00167314 Litecoin (LTC).

Grayscale announced that the XRP token was removed following the Fund’s Quarterly Review on Dec. 31, 2020. No other digital assets qualified to be included in the fund.

Grayscale fired a series of tweets to confirm the sale of XRP tokens.

3/ $XRP was removed following DLC Fund’s Quarterly Review (12/31/20). No others assets qualified for inclusion. The below table highlights DLC Fund’s weightings as of January 4, 2021: $BTC $ETH $BCH $LTC pic.twitter.com/g3QQEf0kd8

— Grayscale (@Grayscale) January 5, 2021

Amid a wave of institutional interest in bitcoin, Grayscale is aggressively buying the leading digital asset. The asset manager bought over 2.5 times more bitcoins than were mined in December last year. 

XRP was among the leading digital assets that rallied in recent months but its prospects changed when Ripple’s CEO, Brad Garlinghouse announced that the company was bracing for a lawsuit from the securities regulator. 

A series of delistings from small and major exchanges has negatively affected the prices of the token which has so far plunged more than 50%.