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Crypto asset manager Grayscale has removed XRP from its Digital Large Cap Fund.

Announcing the news on Tuesday, Grayscale said it sold all XRP from the fund on Monday and bought more of bitcoin (BTC), ether (ETH), litecoin (LTC), and bitcoin cash (BCH). XRP was approximately 1.46% of the fund.

The revised components of the fund are BTC (81.63%), ETH (15.86%), LTC (1.43%), and BCH (1.08%).

Grayscale did not mention the recent lawsuit filed against Ripple by the U.S. Securities and Exchange Commission (SEC) as a reason for removing XRP from the fund. But said Genesis Global Trading, the fund’s authorized participant, is suspending XRP trading on January 15, so it had to remove the asset.

It is not clear whether Grayscale’s other XRP product, Grayscale XRP Trust, would face similar action. The Block has reached out to the firm and will update this story should we hear back.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Venture capital firm a16z and exchange operator Coinbase intend to challenge Financial Crimes Enforcement Network’s (FinCEN’s) proposed crypto wallet rules in court should it become law.

The intention was revealed by a16z’s Kathryn Haun and Coinbase’s Brian Armstrong in tweets on Monday, who said the proposed rules are ill-advised and shouldn’t go forward.

FinCEN, a bureau of the U.S. Treasury Department, seeks to heighten identification requirements for crypto transactions. The proposed rules would subject all wallets, including self-hosted or non-custodial wallets, to know-your-customer (KYC) and reporting requirements for transactions above $3,000. Exchanges would also need to submit and store records involving transactions worth more than $10,000 in a given reporting period.

“The new rule, ostensibly aimed at fighting financial crime, would require various cryptocurrency entities to collect and report detailed personal identifiable information of their customers’ counterparties, a standard applied to no other sector of the financial industry today,” said Haun, a general partner at a16z and a former federal prosecutor. “Such an ill-advised regulation will have many foreseeable and unintended negative consequences.”

Haun said the proposed rules are “arbitrary and capricious,” as well as procedurally and substantively defective. “FinCEN should reconsider & instead engage in meaningful consultation with the crypto industry to assist in fighting financial crime,” she said. “As proposed the rule is more likely to hinder the prosecution of financial crime by driving it offshore & making it harder to trace.”

“If this ill-advised rule goes forward, a16z intends to join others in challenging it in court but urges the agency to do its job & evaluate the legality in 1st instance, not leave it to a court to address myriad legal deficiencies,” said Haun.

Coinbase’s Armstrong said the exchange operator “intends to join A16Z in challenging this in court, if it goes through.”

Several industry players have shown disappointment and have urged FinCEN to reconsider the proposed rules. They have also asked the bureau to extend the abnormally short comment period of 15 days that ended on January 4 to standard 60 days. The deadline has apparently moved by three days to January 7 as of this writing.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• Several relevant crypto metrics surpassed the $1 trillion mark in 2020.
• Total adjusted on-chain transaction volume of stablecoins was $1.061 trillion for 2020 — exceeding the $1 trillion mark for the first time.
• Binance’s spot volume single-handedly exceeded the $1 trillion mark in 2020, coming in at $1.077 trillion (59% of total spot volume).

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The price of bitcoin could rise above $146,000 over the long term, according to JPMorgan strategists.

In a note published Monday, strategists led by Nikolaos Panigirtzoglou wrote that bitcoin’s competition with gold has already started and that implies a significant upside for bitcoin over the long term.

The strategists said gold exchange-traded funds (ETFs) have seen outflows of more than $7 billion since mid-October, while the Grayscale Bitcoin Trust (GBTC) has witnessed inflows of more than $3 billion. That suggests investors are preferring bitcoin over gold, and this trend will continue, according to the strategists.

“There is little doubt that this competition with gold as an ‘alternative’ currency will continue over the coming years given that millennials will become over time a more important component of investors’ universe and given their preference for ‘digital gold’ over traditional gold,” the strategists said.

“Private gold wealth is mostly stored via gold bars and coins the stock of which, excluding those held by central banks, amounts to 42,600 tonnes or $2.7tr including gold ETFs. Mechanically, the market cap of bitcoin at $575bn currently would have to rise by x4.6 from here, implying a theoretical bitcoin price of $146k, to match the total private sector investment in gold via ETFs or bars and coins.”

But that outlook depends on bitcoin’s volatility converging to that of gold over the long term, the strategists said. And that convergence is a “multi-year process,” which implies that the “above $146k theoretical bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”

As for this year, the strategists see headwinds for bitcoin, with indicators like a buildup of speculative long positions. “We believe that the valuation and position backdrop has become a lot more challenging for bitcoin at the beginning of the New Year. While we cannot exclude the possibility that the current speculative mania will propagate further pushing the bitcoin price up towards the consensus region of between $50k-$100k, we believe that such price levels would prove unsustainable.”

Bitcoin’s price has risen sharply in the last two weeks and is currently trading at around $31,445, according to tracker TradingView. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.