The US Securities and Exchange Commission has indicated that it will not pursue enforcement against tokens associated with blockchain-based Decentralized Physical Infrastructure Networks (DePIN).
In a no-action letter issued on Monday, SEC Division of Corporation Finance chief counsel Michael Seaman stated he “will not recommend enforcement action” regarding the planned token launch of the DePIN project DoubleZero.
SEC Commissioner Hester Peirce also noted that the “economic reality of DePIN projects differs fundamentally from the capital-raising transactions Congress tasked this Commission with regulating.”
The SEC’s rare no-action letter exemplifies the agency’s ongoing crypto enforcement leniency under the Trump administration, which aims to create a more welcoming regulatory environment for companies and projects in the US.
DoubleZero’s token is not a security
In its letter, DoubleZero mentioned that its protocol facilitates blockchain systems’ access to “underutilized private fiber links” managed by various contributors. Network participants would be given and sold the 2Z token.
“This is more than just a milestone for DoubleZero — it proves that US innovators can collaborate with regulators to achieve clarity while maintaining momentum,” stated Austin Federa, the co-founder of DoubleZero and former strategy lead for the Solana Foundation.
DoubleZero’s general counsel Mari Tomunen emphasized that the SEC’s no-action letter “highlights that there is a viable path to launch a token. When the token’s value is derived from the contributions of network participants, Howey simply does not apply.”
SEC won’t “regulate all economic activity”
Peirce remarked that the no-action letter “provides an opportunity to evaluate how we, as regulators, can promote innovation without extending our jurisdiction beyond what Congress has authorized.”
“Congress established the Securities and Exchange Commission to oversee the securities markets, not to regulate all economic activity.”
She further stated that the agency’s stance allows crypto infrastructure builders to “focus on developing infrastructure rather than getting bogged down in the intricacies of securities laws.”
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Policing DePIN tokens would suppress market
Peirce asserted that DePIN tokens “function as incentives aimed at promoting infrastructure development” and do not represent company shares or promise profits derived from others’ efforts, which would categorize them under securities laws.
“These projects distribute tokens as compensation for work completed or services provided, rather than as investments expecting profit from the entrepreneurial or managerial efforts of others,” she elaborated.
“Classifying such tokens as securities would hinder the growth of networks of distributed service providers.”
Peirce warned that blockchain technology could never fully realize its potential if regulators compel all activities into pre-existing financial market regulatory frameworks.
Tokens linked to DePIN projects appeared unaffected by the SEC’s announcement, with CoinGecko indicating a 2% drop in value over the previous day.
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