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Grayscale Faces Regulatory Issues as SEC Filecoin as Security


A notable development in the digital assets sector points to the US Securities and Exchange Commission declaring that Filecoin is a security.

On May 17, a virtual currency (crypto asset) management firm Grayscale, announced that SEC is determined to categorize FIL (Filecoin) as a security.

More Details of the Story

Reportedly, GrayScale applied to SEC last April to register the Filecoin investment trust fund.

The company voluntarily applied for Form 10 to the SEC to obtain a reporting standing for the trust.

However, the regulators reacted contrary to what Grayscale expected.

The update on the filing shows that SEC asked the company to withdraw its application since Filecoin is regarded as a security.

How is Grayscale Handling the Situation?

Grayscale promptly restated that Filecoin shouldn’t be categorized as a security.

It further said the organization would soon show SEC why by briefly explaining its legal stance.

Notably, Grayscale’s application for Filecoin mutual fund was made in compliance with the Securities Exchange Act of 1934.

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Following this, SEC realized that the Investment Company Act 1940 may apply.

As such, Grayscale stated that it could reapply for registration in compliance with the Investment Companies Act of 1940 or completely drop the Filecoin mutual fund registration.

Meanwhile, the firm behind the Filecoin protocol, Protocol Labs, must show its official statement to address this development.

Filecoin (FIL) is ranked 33rd by Market Cap. When the breaking news of issues with the regulators came out, it suffered a light price dip.

But at press time, the coin has regained and is now trading in the green at $4.54 representing a gain of 1.96% in 24 hours.

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Notable Facts

This latest action of the SEC has again revealed the level of its advanced monitoring of the digital assets environment.

Since this year, the Securities and Exchange Commission has imposed fines on various US cryptocurrency exchanges that they say sold unregistered securities.

The latest one includes Bittrex, which later filed for bankruptcy.

Even though the regulatory body does not regard every digital asset as a security, the Howey test is still the crucial benchmark.

Meanwhile, as the controversies regarding the category and management of digital assets are ongoing globally, industry stakeholders and market players are anticipating more developments.






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