The US Securities and Exchange Commission has signalled that it won’t take enforcement action against tokens tied to blockchain-based Decentralized Physical Infrastructure Networks (DePIN).
In a no-action letter on Monday, SEC Division of Corporation Finance chief counsel Michael Seaman said he “will not recommend enforcement action” to the SEC for the planned token launch of the DePIN project DoubleZero.
SEC Commissioner Hester Peirce separately added that the “economic reality of DePIN projects differs fundamentally from the capital-raising transactions Congress charged this Commission with regulating.”
The rare no-action letter from the SEC is the agency’s latest example of its crypto enforcement rollback under the Trump administration, which has promised regulatory easing to attract companies and projects to the US.
DoubleZero’s token is not a security
The SEC’s Seaman said the programmatic transfers that the DoubleZero Foundation detailed in a letter on Thursday do not require registration under US securities laws, and its planned 2Z token “is not registered as a class of equity securities.”
In its letter, DoubleZero stated that its protocol enables blockchain systems to access “underutilized private fiber links” managed by various contributors. Network participants would be offered and sold the 2Z token.
“This is more than a milestone for DoubleZero — it’s proof that US founders and innovators can work with regulators to achieve clarity, and still move fast,” said Austin Federa, the co-founder of DoubleZero and former strategy lead for the Solana Foundation.
DoubleZero general counsel Mari Tomunen said the SEC’s no-action letter “underscores that there is a path to launch a token. When the value of the token comes from other network participants’ work, Howey simply does not apply.”
SEC won’t “regulate all economic activity”
The SEC’s Peirce said the no-action letter “offers an opportunity to reflect on how we, as regulators, can foster innovation without expanding our reach beyond what Congress has mandated.”
“Congress created the Securities and Exchange Commission to oversee the securities markets, not to regulate all economic activity.”
She added the agency’s position allows crypto infrastructure providers to “spend their time deep in the weeds of building out infrastructure, not knee-deep in parsing the nuances of securities laws.”
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Policing DePIN tokens would suppress market
Peirce said that DePIN tokens “are functional incentives designed to encourage infrastructure buildout” and are not shares in a company, nor promise profits from the effort of others that would see them captured under securities laws.
“These projects allocate tokens as compensation for work performed or services rendered, rather than as investments with an expectation of profit from the entrepreneurial or managerial efforts of others,” she explained.
“Treating such tokens as securities would suppress the growth of networks of distributed providers of services.”
Peirce said that blockchain technology can’t reach its full potential if regulators “force all activities into existing financial market regulatory frameworks.”
DePIN tokens seemingly didn’t react to the SEC’s decision, with CoinGecko showing tokens tied to the market segment lost 2% in the past day.
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