The SEC just issued its second “no-action letter” toward the Decentralized Physical Infrastructure Network (DePIN) crypto project in recent months, giving its native token “regulatory cover” from enforcement.
The no-action letter was sent to the Solana DePIN Fuse project, which issues a network token, FUSE, as a reward to those who actively maintain the network.
Fuse initially submitted a letter to the SEC’s Division of Corporate Finance on November 19, requesting formal confirmation that it would not recommend enforcement action to the SEC if the project continued to offer and sell FUSE tokens.
Fuse also clarified in its letter that FUSE is designed for network utility and consumer purposes, not for speculation. They can only be redeemed at the average market price via third parties.
“Based on the facts presented, the Division will not recommend enforcement action to the Commission if Fuse, based on your opinion as counsel, offers and sells tokens in the manner and under the circumstances described in your letter,” Deputy Chief Counsel for the Division of Corporate Finance, Jonathan Ingram, wrote on Monday.
The SEC’s latest no-action letter comes just a few months after the SEC issued a similar “highly desirable” letter to Double Zero, which was seen as a result of new, more cryptocurrency-friendly leadership at the SEC.
At the time, Austin Videra, co-founder of DoubleZero, said such messages were common at TradFi but “very rare” in the cryptocurrency space.
“The process took months, but we found the SEC to be very receptive, we found them to be completely professional, very diligent, and there was no hostility toward cryptocurrencies.”
The SEC was put under new leadership in April, after Paul Atkins was sworn in as its 34th chairman, and the agency has since been seen taking a more balanced approach to cryptocurrencies. As part of the leadership, crypto-friendly Hester Peirce also chairs the agency’s cryptocurrency task force.
No-action letters from the SEC are a form of regulatory clarity
Adding to the discussion around X, Rebecca Rettig, legal representative for Solana MEV infrastructure platform Jito Labs, said that no-action letters are required by many cryptocurrency projects.
“Why would crypto teams want it? Regulatory clarity.” If you plan to issue a token, NAL provides reasonable assurance that you won’t face immediate execution for violations of securities laws. “It’s a kind of regulatory blanket,” she wrote.
The SEC granting Fuse a pass was not unexpected: Cryptocurrency Lawyer
However, the no-action rhetoric does not necessarily set any new precedents.
Commenting on the issue via X on Monday, Consensys’ lawyer Bill Hughes said this was an “easy case”, given the nature of the Fuse code.
“The bottom line is that no cryptocurrency lawyer would have thought that this token was a security. And there may not even be any lawyer who was familiar with just Howey,” Hughes said.
Crypto founders applaud new SEC leadership
After an era in which many cryptocurrency founders, US companies and projects said they felt hostility from the SEC under former Chairman Gary Gensler, the latest interaction with Fuse suggests that the agency has significantly changed its approach.
In the same month that Double Zero received its no-action letter, the SEC also issued a similar no-action letter to crypto custodians that do not qualify as banks.
While they still have to meet strict conditions, the no-action letter provides clear guidelines for acceptable ways for these types of companies to operate and transact with cryptocurrencies, something the industry has been pleading for over the past few years.
