According to a Grayscale announcement from Wednesday, May 17th, the staff of the Securities and Exchange Commission believes that FIL fits the definition of a security. The information comes as a reply to Grayscale’s April registration filing for the Grayscale Filecoin Trust (FIL).

SEC Believes FIL Meets Definition of Security

According to Grayscale, a reply it received from the Securities and Exchange Commission this Wednesday, the watchdog believes that FIL “meets the definition of a security under the federal securities laws”. The comment was received as part of the process following a registration filing for the Grayscale Filecoin Trust (FIL) made on April 14th.

Grayscale also stated it disagrees with the SEC’s view. The company announced it would respond to the Commission with an explanation for its belief FIL does not meet represent a security.

Grayscale does not believe that FIL is a security under the federal securities laws and intends to respond promptly to the SEC staff with an explanation of the legal basis for Grayscale’s position. Grayscale cannot predict whether the SEC staff will be persuaded that Grayscale’s position is correct, and if not, whether it may become necessary for Grayscale to seek accommodations that would enable the Trust to register under the Investment Company Act of 1940 or, alternatively, seek dissolution of the Trust.

FIL is the native currency of Filecoin—an open-source, public cryptocurrency and digital payment system. Its price briefly and sharply declined upon the initial release of the announcement before quickly recovering almost entirely.

SEC’s Increasing Pressure on Digital Assets Industry

The Securities and Exchange Commission has been maintaining pressure on the cryptocurrency industry for several years. In recent months, however, there has been an upsurge both in hawkish rhetoric and in enforcement actions coming from the agency.

The increased scrutiny has led several companies to depart from the United States often citing regulatory climate in the country. Similarly, multiple major companies like Coinbase have been warning that the watchdog’s aggressiveness can damage America’s innovative edge.

The SEC has, however, also received a lot of opposition over the years. This Tuesday, for example, it suffered another setback in its long-standing legal battle with Ripple over the allegation that XRP is a security when the court decided against keeping the Hinman Documents sealed.

This article originally appeared on The Tokenist