Grayscale Investments, the world’s largest digital asset manager, has shared an update on the status of its Form 10 application with the U.S. Securities and Exchange Commission (SEC) for its Grayscale Filecoin Trust.
The Grayscale Filecoin Trust is an investment vehicle that allows investors to gain exposure to Filecoin without having to hold the cryptocurrency directly.
The investment firm launched its Grayscale Filecoin Trust Product in 2021, giving investors indirect exposure to Filecoin (FIL). Notably, the firm voluntarily filed Form 10 with the SEC to get the regulator’s reporting status, which led to a withdrawal warning from the SEC.
SEC Warns Grayscale Over Status of Filecoin as a Security
The SEC recently issued a warning to Grayscale Investments regarding the status of Filecoin, a popular cryptocurrency that has been gaining traction in recent years.
According to the SEC, Filecoin meets the definition of a security under existing regulations, which means that it may be subject to additional regulation in the future. Additionally, the regulators asked Grayscale to withdraw its application of making the Filecoin Trust product more like a public company.
However, Grayscale did not believe that FIL is a security, and as such, intends to respond swiftly to the SEC with a detailed explanation of the legal stand for Grayscale’s position. While the firm is not sure if the regulator will agree with its explanations, it said it would “seek accommodation” for the registration of the trust or discontinue the product altogether.
Meanwhile, this news has significant implications for the cryptocurrency industry as a whole, particularly for investors who may have been considering purchasing Filecoin or similar digital assets. The SEC’s warning suggests that there may be increased scrutiny of cryptocurrency offerings in the coming months and years, which could lead to greater transparency and accountability but also potentially limit the growth and adoption of these technologies.
Overall, the SEC’s warning to Grayscale regarding FIL highlights the ongoing tension between innovation and regulation in the world of cryptocurrency. Undoubtedly, the SEC has gone after American-based crypto exchanges Kraken, Bittrex, and Coinbase Global for allegedly selling unregistered securities.
Recall that, Grayscale’s CEO Michael Sonnenshein, shared his optimism after the oral hearing in its lawsuit against the US regulator. According to Micheal, the conversion to an ETF (Exchange Traded Funds) is a suitable outcome for GBTC (Grayscale Bitcoin Trust).
