The United States Securities and Exchange Commission (SEC) believes Filecoin’s native FIL token is a security, crypto asset manager Grayscale Investments has revealed.

According to the May 17 announcement, Grayscale lodged an application with the regulator to launch a Filecoin Trust product on April 14, which would provide investors with indirect exposure to the underlying FIL token.

In a comment letter from SEC staff on May 16, the regulator then warned Grayscale that FIL “meets the definition of a security” under federal law and asked them to withdraw their application for the Trust product.

Grayscale stated that under its view, Filecoin is not a security and will be sending an explanation to the SEC for its reasoning.