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- The U.S. SEC sent Grayscale a comment letter saying the company is selling FIL, an unregistered security.
- Grayscale responded to the SEC explaining why FIL is not a security.
- FIL had an interesting reaction to the SEC’s comments.
The current crypto bear market is one of the industry’s toughest. And not only because digital asset prices remain suppressed.
Another reason for the severity of the bear market is the tough regulatory environment, especially in the U.S. For example, Grayscale just received a letter from the SEC implying that the fund sells unregistered securities.
SEC Thinks FIL Is Security
FIL, the largest decentralized storage protocol Filecoin’s native currency, is a security.
That’s at least what the U.S. Securities and Exchange Commission (SEC) thinks. On Wednesday, Grayscale, a digital asset manager, said it received a comment letter from the SEC claiming that the company is selling unregistered securities, including FIL.
Grayscale also added that the SEC “requested that Grayscale seek withdrawal of the registration statement promptly.”
US SEC staff said that Filecoin meets the definition of a security and requested that Grayscale withdraw its registration statement for Filecoin Trust. Grayscale does not believe that FIL is a security and intends to respond promptly to the SEC staff. https://t.co/ySI5UV7dpM
— Wu Blockchain (@WuBlockchain) May 18, 2023
However, Grayscale disagreed with the SEC’s comments. The company believes that FIL isn’t a security “under the federal securities laws” and intends to respond to the SEC by explaining why.
At the same time, Grayscale admitted that it’s unable to predict whether the SEC will agree with the company’s response.
“Grayscale cannot predict whether the SEC staff will be persuaded that Grayscale’s position is correct, and if not, whether it may become necessary for Grayscale to seek accommodations that would enable the Trust to register under the Investment Company Act of 1940 or, alternatively, seek dissolution of the Trust.”
FIL, on the other hand, had no material reaction to the SEC’s comments.
Filecoin (FIL) Price Remains Unchanged After SEC Comments
Filecoin’s FIL, which the SEC believes is a security and should’ve registered with the agency, reacted fairly to the SEC’s comments.
FIL is currently trading at $4.50, up 1.9% on the day, according to data from CoinGecko. FIL is down over 98% from its all-time high of $236.84.
FIL has a market cap of $1.91 billion and is the 33rd largest cryptocurrency in the industry.
On the Flipside
- The SEC’s comments don’t mean the agency will file an enforcement action against Grayscale.
Why This Matters
The SEC has been waging a war against the cryptocurrency industry. If the SEC officially deems FIL and other cryptocurrencies securities, the whole industry might suffer a terrible blow.
Read more about potential SEC involvement in Coinbase’s decision to halt ETH reward withdrawals:
Coinbase Halts ETH Staking Reward Withdrawals: Is SEC Action Related?
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