SEC Warns Filecoin ‘Meets the Definition of a Security’ – Grayscale

The United States Securities and Exchange Commission (SEC) considers Filecoin’s native FIL token to be a security, crypto asset manager Grayscale Investments has revealed.

as of 17 May AnnouncementGrayscale filed an application with the regulator on April 14 to launch the Filecoin Trust product, which will provide investors with indirect exposure to the underlying FIL token.

In a comment letter to SEC staff on May 16, the regulator warned Grayscale that FIL “meets the definition of a security” under federal law and asked them to withdraw their application for the trust product.

Grayscale said that under its view, Filecoin is not a security and will send clarification to the SEC for its reasoning.

“Grayscale does not believe that the FIL is a security under the federal securities laws and intends to promptly respond to SEC staff with an explanation of the legal basis for Grayscale’s position.”

Grayscale noted that it “cannot predict” whether the SEC will be persuaded to accept its explanation, and may “seek an accommodation” to register the trust. Alternatively, the investment firm warned that it could be forced to dissolve the trust altogether.

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The SEC update continues the watchdog’s crackdown on crypto products, which has recently hit several US crypto exchanges.

On February 9 the SEC fined US-based crypto exchange Kraken for “selling unregistered securities” and ordered the exchange to shut down its staking-as-a-service program.

Most recently on March 22, Coinbase, the largest publicly traded crypto exchange in the US, received a Wells notice – a legal document that usually precedes enforcement action – from the regulator, alleging “potential violations of securities laws”. For.

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This is a developing story, and further information will be added as it becomes available.