Grayscale’s Filecoin Trust Faces Setback as SEC Deems FIL a Security and Requests Application Retraction

The US Securities and Exchange Commission (SEC) has warned Grayscale that its Filecoin (FIL) tokens qualify as securities. In response, the crypto manager, which is part of the Digital Currency Group, was asked to retract the Form 10 request submitted for the Filecoin Trust. The request would have made it an entity reporting quarterly results, similar to publicly traded companies. Grayscale has been guided to register as an investment vehicle, which could hinder its ability to issue securities, among other limitations. However, if the Filecoin Trust were to be classified as an entity primarily dealing in securities, it would have to pass the Howey Test, which looks at whether a transaction is an investment contract that is considered a security. As FIL has a legitimate use case as a method of payment for Filecoin’s data storage services, it may disqualify it from passing the Howey Test. Grayscale intends to fight back against the regulatory decision, but will comply if it cannot convince the SEC. News of the latest regulatory action targeting FIL sent the token’s price on a brief downward trend. However, according to CoinGecko, the token has since rebounded and was trading at around $4.60 at the time of writing.

J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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