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The US Securities and Exchange Commission (SEC) considers Filecoin’s native FIL token to be a security, crypto asset manager Grayscale Investments said.
According to the May 17 announcement, Grayscale has filed with the regulator to launch the Filecoin Trust product on April 14, which will give investors indirect access to the underlying FIL token.
In a May 16 letter of comment from SEC officials, the regulator warned Grayscale that the FIL “meets the definition of a security” under federal law and asked them to withdraw the application for the Trust product.
Grayscale stated that it believes Filecoin is not a security and will send an explanation of its reasoning to the SEC.
“Shades of Gray does not believe that FIL is a security under federal securities laws and intends to respond promptly to SEC officials explaining the legal basis of Grayscale’s position.”
Shades of Gray noted that they “cannot predict” whether the SEC will be persuaded to accept her explanation and may “look for accommodations” to register the trust. Alternatively, the investment firm warned that it might be forced to dissolve the trust entirely.
Related: SEC Seeks Rejection of Coinbase Petition on Inevitable Crypto Rules
This update from the SEC marks the continuation of the regulator’s crackdown on cryptocurrency products, which has recently hit a number of U.S. cryptocurrency exchanges hard.
On Feb. 9, the SEC fined U.S.-based cryptocurrency exchange Kraken for “selling unlisted securities” and ordered the exchange to shut down its staking-as-a-service program.
Most recently, on March 22, Coinbase, the largest publicly traded cryptocurrency exchange in the US, received a Wells notice — a legal document that usually precedes enforcement action — from a regulator for “potential violations of securities laws.”
This is an evolving story and more information will be added as it becomes available.