The decentralized storage system Filecoin has recently garnered attention as its native cryptocurrency, FIL, experienced a 3% increase in value within the last 24 hours. This growth occurred despite the U.S. Securities and Exchange Commission (SEC) labeling Filecoin as a security. Currently trading at $4.61, FIL holds a market cap of $1.9 billion.
On May 19, the SEC requested that Grayscale Investments, a prominent crypto asset manager, withdraw their application for a Filecoin Trust. Preceding this, Grayscale had voluntarily filed Form 10, aiming to make their Filecoin Trust a reporting company for the purpose of filing quarterly and annual reports. The SEC’s request was based on their belief that Filecoin meets the definition of a security under federal securities laws. Grayscale received a letter from the SEC, stating that:
“On May 16, 2023, Grayscale received a comment letter from the SEC staff stating its view that the Trust’s underlying asset, FIL, meets the definition of a security under the federal securities laws, and that therefore the Trust appears to meet the definition of an investment company under the Investment Company Act of 1940. The SEC staff requested that Grayscale seek withdrawal of the registration statement promptly.”
Grayscale has taken a firm stance, claiming that they do not believe FIL is a security under federal securities laws. The asset manager plans to respond to the SEC by providing an explanation of the legal basis supporting their position. However, Grayscale admits that it is uncertain whether they will be able to persuade the SEC to reconsider their decision. Despite this uncertainty, Grayscale will continue to “seek accommodations” for the registration of the trust. In the event that their efforts remain unsuccessful, they may be forced to withdraw the Grayscale Filecoin Trust entirely.
The Grayscale Trust began in March 2017, and the SEC’s recent action is a continuation of their ongoing crackdown on the crypto space. This regulatory crackdown has targeted some of the largest players in the industry, such as Coinbase, Binance, Kraken, and others.
This information underscores the ongoing struggle in the crypto world between innovation and regulation. While some may see the SEC’s actions as a stifling measure, others
Source: Coingape
