The SEC’s Division of Corporate Finance issued a no-action letter to the DePIN DoubleZero project regarding its 2Z token distribution late Monday.
In the letter, the SEC said it would not recommend enforcement action if programmatic token transfers are made in the manner described by DoubleZero and if 2Z is not registered as a class of securities under the Exchange Act.
The Division of Corporate Finance noted that its position was based on representations made in DoubleZero’s attorney’s letter, cautioning that any different facts or circumstances might require a different conclusion. The response also made clear that it merely expresses the SEC’s executive position and has not made a legal decision on the issues raised.
DoubleZero is a high-performance fiber network that uses private, untapped fiber links from independent contributors, and aims to provide blockchain node operators with faster and more direct routing from the public Internet.
The SEC was not created to regulate all economic activity
In a separate statement, Commissioner Hester Peirce said the letter provides an opportunity to reflect on how the SEC can support innovation within its jurisdiction. “Congress created the Securities and Exchange Commission to oversee the securities markets, not to regulate all economic activity,” she said. Pearce described decentralized physical infrastructure networks as projects that organize participants to provide real-world capabilities—such as storage, bandwidth, or power—through open, distributed systems. Participants earn tokens for their activity, which Pearce said act as incentives for infrastructure creation rather than as investment contracts under the Howey Test.
“Blockchain technology cannot reach its full potential if we impose all activities on existing financial market regulatory frameworks,” Pearce added. “Organizing different people to work together to build physical infrastructure is an interesting use of this technology. Markets, not financial regulators, should determine the success of such projects.”
A “milestone” for the US digital asset industry
Following a four-month review process, DoubleZero said the decision represents a major milestone for the US digital asset industry – providing new regulatory clarity and reinforcing that the SEC recognizes meaningful distinctions between token transactions following Project Crypto’s recently launched initiative to collaborate more closely with the industry on guidelines.
“This is more than just a milestone for DoubleZero — it’s proof that American founders and innovators can work with regulators to achieve clarity, and continue to move quickly,” said Austin Videra, co-founder of DoubleZero. “By recognizing the functional nature of the 2Z token, the SEC has created a space for compliant, utility-based innovation in cryptocurrencies, at home in America. I want to thank the SEC and the Department for their leadership in bringing clarity that helps cryptocurrencies grow in the United States.”
The regulatory clarity comes ahead of the planned mainnet beta launch of DoubleZero, which is expected to roll out later this week. In March, DoubleZero announced that it had raised $28 million in a token round led by Multicoin Capital and Dragonfly Capital.
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