According to recent news, the US Securities and Exchange Commission (SEC) required Grayscale Investments to withdraw its request to apply for a Filecoin Trust, citing concerns that its underlying asset, Filecoin, which was launched in 2014 by California-based tech company Protocol Labs, could be viewed as a security.
Filecoin Cannot be Categorized as a Security
Grayscale said on May 17 that it has filed a Form 10 application with the Commission on April 14 to introduce an improved Filecoin Trust product.
The Form 10 would give rise the firm’s previous Filecoin Trust business to the status of a public company, requiring quarterly financial reporting.
Cancellation of Request for Grayscale Filecoin Trust Product
On May 16, Grayscale reported it got a comment letter from SEC staff, in which the agency pointed out that FIL “meets the definition of a security” under federal law and ordered them to cancel their request for the trust product. Grayscale declared that, in its opinion, Filecoin is not a security and that it will explain its rationale to the SEC.
It states that “Grayscale does not believe that FIL is a security under federal securities laws and intends to respond promptly to the SEC staff with an explanation of Grayscale’s legal basis for Grayscale’s position.”
All Coins Except BTC are Securities: SEC
Notably, contrary to the SEC claim, Paxos, a blockchain infrastructure platform, stated back in February this year that it is completely disapproving of the authorities since Binance USD (BUSD) stablecoin is not to be considered as a security.
Backlash from the Crypto Industry
Coinbase’s Chief executive officer, Brian Armstrong, like Paxos, has stated that the company is eager to defend its staking products in court after the SEC accused it of offering unregistered securities.
In addition, he claims that his firm’s staking services do not fulfill the Howey Test, which evaluates investment possibilities based on four criteria that is investment of money, common enterprise, a reasonable expectation of rewards, and other people’s efforts.