The US Securities and Exchange Commission has indicated that it will not take enforcement action against tokens associated with blockchain-based decentralized physical infrastructure (DePIN) networks.
In a no-action letter on Monday, Michael Seaman, senior counsel for the SEC’s Division of Corporate Finance, said he “will not recommend enforcement actions” to the SEC for the planned token launch of the DePIN DoubleZero project.
SEC Commissioner Hester Peirce added separately that “the economic reality of DePIN projects differs fundamentally from the capital raising transactions that Congress has charged this Commission to regulate.”
The rare no-action letter from the SEC is the latest example of the agency stepping back from crypto enforcement under the Trump administration, which promised regulatory relief to attract companies and projects to the United States.
DoubleZero token is not security
The automated transfers that DoubleZero detailed in a letter on Thursday do not require registration under U.S. securities laws, and the planned 2Z token “is not registered as a class of securities,” the SEC’s Seaman said.
DoubleZero said in its letter that its protocol enables blockchain systems to access “untapped private fiber links” managed by different stakeholders. The 2Z token will be offered and sold to network participants.
“This is more than just a milestone for DoubleZero — it’s proof that American founders and innovators can work with regulators to achieve clarity, while still moving quickly,” said Austin Videra, co-founder of DoubleZero and former Chief Strategy Officer of the Solana Foundation.
DoubleZero’s general counsel, Mari Tumonen, said the SEC’s no-action letter “confirms that there is a path to launching a token. When the value of the token comes from the labor of other network participants, Howey simply does not apply.”
The SEC will not “regulate all economic activity.”
The SEC’s Pearce said the no-action letter “provides an opportunity to think about 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 that the agency’s position allows cryptocurrency infrastructure providers to “spend their time delving into building infrastructure, not delving into analyzing the nuances of securities laws.”
Censoring DePIN tokens would suppress the market
DePIN tokens “are functional incentives designed to encourage infrastructure construction” and are not shares in a company, nor do they promise profits from the efforts of others that might be seized under securities laws, Pierce said.
She explained, “These projects allocate tokens as compensation for work performed or services provided, and not as investments with the expectation of profit from the entrepreneurial or managerial efforts of others.”
“Treating such tokens as securities would inhibit the growth of DSP networks.”
Pearce said blockchain technology cannot reach its full potential if regulators “force all activity into existing financial market regulatory frameworks.”
DePIN tokens appear to have not responded to the SEC’s decision, as CoinGecko showed that tokens tied to the market sector lost 2% in the past day.
