Filecoin Foundation Lashes Out at SEC for Classifying FIL as Security

UTC by Bhushan Akolkar · 2 min read
Filecoin Foundation Lashes Out at SEC for Classifying FIL as Security
Photo: Depositphotos

Grayscale also noted that it doesn’t believe that Filecoin is security and seeks to respond to the SEC staff with a legal basis for their position.

Earlier this week, the US Securities and Exchange Commission (SEC) classified the cryptocurrency Filecoin as a security and even asked asset manager Grayscale to pull up their application for the Grayscale Filecoin Trust. However, Filecoin has rejected the observation from the SEC adding that FIL was not a security. The Filecoin Foundation described the blockchain network as “a decentralized, peer-to-peer network for storing files”.

Is FIL a Security?

In an email statement to the crypto news publication CryptoSlate, Filecoin noted:

“Over the last decade, thousands of people around the world have contributed to this open-source project to create a decentralized, efficient, and robust foundation for humanity’s most important information. That includes hundreds of organizations and teams building on the network, thousands of storage providers, and 13,000 Github contributors, building a foundational layer for the next generation of the web.”

The SEC action, however, hasn’t triggered much movement in the Filecoin (FIL) price. As of press time, FIL is trading 1.98% down at a price of $4.46 and a market cap of $1.8 billion.

SEC and Cryptocurrencies

The US securities regulator has been going hammer and tongs after crypto assets. SEC chair Gary Gensler also stated that almost every other cryptocurrency classifies as a security and thus shall be subject to federal securities laws.

Previously, Grayscale had filed for Form 10 to make the Grayscale Filecoin Trust a reporting company wherein they would quarterly reports as well as annual reports. However, the SEC asked Grayscale to withdraw this application. In its press release, Grayscale noted:

“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.”

However, Grayscale also noted that it doesn’t believe that Filecoin is security and seeks to respond to the SEC staff with a legal basis for their position. It will be interesting to see what actions the SEC initiates on the decentralized storage platform, Filecoin.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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