FIL Up 3% Despite the US SEC Calling Filecoin A Security

FIL, the native cryptocurrency of the decentralized storage system Filecoin is up by 3% over the last 24 hours and is currently trading at $4.61 with a market cap of $1.9 billion.

The recent up move in FIL comes despite the U.S. Securities and Exchange Commission (SEC) calling Filecoin a security. On Wednesday, May 19, the SEC asked Grayscale Investments to pull their application for a Filecoin Trust.

Earlier, crypto asset manager Grayscale had voluntarily filed for Form 10 to make its Filecoin Trust product a reporting company wherein it would need to file quarterly and annual reports. But the SEC has asked Grayscale to withdraw its application while calling Filecoin, a security.

In a press release on Wednesday, Grayscale said that they have received a letter from the topmost securities regulator noting that FIL “meets the definition of a security”. The press release notes:

“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: Filecoin Is Not A Security

Clarifying its stand, Grayscale stated that it doesn’t believe that FIL is a security under federal securities laws. The asset manager seeks to reply to the SEC with an explanation of the legal basis of Grayscale’s position.

However, Grayscale added that they cannot predict enough whether they can persuade the SEC to reconsider the decision. But it will “seek accommodations” for the registration of the trust. However, it might also be forced to withdraw the Grayscale Filecoin Trust in its entirety.

The asset manager launched Grayscale Trust back in March 2017. The latest action from the SEC is in continuation of its crackdown initiated over the crypto space in the last few months. The securities regulator has targetted some of the biggest players in the crypto space such as Coinbase, Binance, Kraken, and others.