Servers Configured To Use SendGrid As Their SmartHost Fail To Send Email With The Following Error "535 Authentication failed: Basic authentication is not allowed with 2FA enabled"

Symptoms:

When attempting to send an email from the server, you will see this failure in exim_mainlog:

2021-03-29 18:34:32 1lQs2K-0008Jy-7f sendgrid_login authenticator failed H=smtp.sendgrid.net [IP_ADDRESS] 535 Authentication failed: Basic authentication is not allowed with 2FA enabled. To fix, see https://sendgrid.com/docs/for-developers/sending-email/authentication/#basic-authentication

Explanation:

This is not a cPanel-related issue and is related to recent changes to the authentication requirements in SendGrid's API. 

As of Q4 2020 two-Factor authentication is required and all Twilio SendGrid API endpoints will reject new API requests and SMTP configurations made with a username and password via Basic Authentication.

You can read more about this issue here:

https://sendgrid.com/docs/for-developers/sending-email/upgrade-your-authentication-method-to-api-keys/

Workaround: 

Here you can find the workaround suggest by SendGrid official documentation:

https://sendgrid.com/docs/for-developers/sending-email/authentication/#basic-authentication

Please note that, if you require further assistance with this issue you must reach out to SendGrid's support channel:

https://support.sendgrid.com/hc/en-us