- Grayscale says it disagrees with SEC’s staff over suggestions that Filecoin (FIL) is a security.
- The letter from the SEC staff was sent on 16 May 2023, after Grayscale applied to list the Grayscale® Filecoin Trust (FIL) (OTCQB: FILG)
- SEC staff also believe the meet the Grayscale® Filecoin Trust “meets the definition of an investment company under the Investment Company Act of 1940.”
Grayscale says it received comment from the US Securities and Exchange Commission (SEC) staff regarding the underlying asset of the Grayscale® Filecoin Trust (FIL) (OTCQB: FILG) that the digital asset manager was looking to register.
In particular, Grayscale’s press release A letter sent by SEC employees on 16th May is cited. According to the staff, FIL, the native token of the Filecoin cryptocurrency ecosystem, “meets the definition of a security.”
The SEC’s comment highlighted the fact that this opinion was taken with a thorough understanding of securities laws.
Grayscale disagrees with SEC’s letter that FIL is a security
The Filecoin Trust appears to also “meet the definition of an investment company under the Investment Company Act of 1940,” the letter stated. Grayscale’s staff requested that Grayscale withdraw its registration as a FILG, which it had sought in April.
“Grayscale does not believe that FIL is a security under the federal securities laws and intends to respond promptly to the SEC staff with an explanation of the legal basis for Grayscale’s position,” Grayscale said in its press release on Wednesday.
According to Grayscale, it’s difficult to tell whether the US regulator’s staff will agree with it in terms of the assessment that Filecoin is not a security. If their communication does not convince the SEC they will have to make accommodations in order to register Filecoin Trust.
The statement stated that the company could follow the recommendation and dissolve the Trust.
Grayscale filed a lawsuit against the SEC in 2022 after the agency denied the company’s application to convert its Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF).
On the other hand, the SEC sued Ripple – the company behind XRP – over allegations that the blockchain firm was selling unregistered security. The case has been dragging on since December 2020. However, its conclusion appears to be imminent.
The agency was also criticized elsewhere for its approach towards crypto regulation. This is especially true in regard to the enforcement of its regulations, as has been seen over the last few months.