SEC Excludes Crypto DePIN Tokens from Monitoring

In regulatory decisions that potentially impact decentralized networks, the U.S. Securities and Exchange Commission (SEC) issued No-Action Letter dated September 29, 2025 regarding DoubleZero’s 2Z Token. This token will be used to reward participants in the Decentralized Physical Infrastructure Network (DePIN). The SEC has confirmed that it will not recommend enforcement action if DoubleZero moves forward with the token distribution model outlined in its legal filing. This decision marks the first time that the SEC has publicly allowed DePIN tokens to operate outside of securities laws. It also clarifies how feature-based token rewards differ from traditional investment products.

DePIN tokens will not be treated as securities under SEC review

DoubleZero’s DePIN model allows participants to contribute real-world services such as network connectivity or computational work in exchange for tokens. The project operates without a central management structure and distributes tokens programmatically based on network rules.

According to DoubleZero’s September 25 legal filing, 2Z tokens will be issued in two specific ways. One is to compensate the network providers who provide the connectivity, and the other is to the resource providers who calculate the payment calculations for those services.

Because the distribution of these tokens is directly tied to user activity rather than passive investment or speculation, the SEC determined that 2Z tokens do not meet the definition of a security. Therefore, the regulator said it will not require DoubleZero to register its tokens under securities or exchange laws.

This distributed model does not satisfy the Howey test

The SEC’s decision focused on applying the Howie test, a legal framework used to determine whether an asset is an investment contract. This test assesses whether an individual invests money in general business primarily with the expectation of profiting from the efforts of others.

In the case of DoubleZero, the SEC confirmed that 2Z tokens were distributed only as compensation for services rendered, not as an investment opportunity. The project does not seek funding from investors, instead using tokens to reward network activity. Token recipients need to actively contribute by running nodes or performing computations, so they don’t have to rely on the efforts of others to receive financial benefits. As a result, the Howey test is not satisfied.

The token is not a financial instrument and serves as an operational incentive

The 2Z token was designed not as a speculative asset, but as a tool to foster network growth through peer-based contributions. DoubleZero’s model does not include any public offering or token sale for the purpose of raising development funds. Instead, token distribution is automated and tied to the desired network task. According to the SEC’s no-action letter, these characteristics place the token outside of traditional securities classification.

The agency noted that DoubleZero uses “programmatic transfer,” meaning tokens are issued through a predefined algorithm that removes any element of administrator discretion. Each participant earns tokens by completing measurable activities, but there are no guarantees or promises of future profits.

Secretary Peirce emphasizes limits on SEC authority

In response to the no-action letter, Commissioner Hester M. Peirce released A formal statement addressing the regulatory approach to distributed infrastructure models. He said the SEC’s mandate from Congress is to regulate securities markets, not all forms of economic adjustment. In her view, the DePIN network is organizing investors to build physical services using token-based rewards that do not resemble securities in form or function.

He further revealed that DePIN projects like DoubleZero operate without a centralized corporate structure often found in capital raising schemes. Because the tokens in these systems are earned through services provided and not held with the expectation of passive return, treating them as securities would extend the SEC’s jurisdiction beyond its legal authority.

Differences between DePIN incentives and traditional fundraising

The SEC’s letter reflects an important distinction between token-based compensation for network activity and investments intended to fund a company’s operations. In DoubleZero’s model, participants receive tokens only after performing certain tasks based on network rules. There are no investors providing capital in exchange for future profits managed by a centralized team.

DoubleZero’s legal team emphasized this point by stating that 2Z tokens have no ownership, capital functions, or contractual benefit mechanisms. The project’s design avoids offering tokens to the public for speculative purposes. The SEC confirmed that in these circumstances, the tokens would not be subject to registration under any federal securities laws.

Programmatic transfers operate without centralized discretion

The system DoubleZero uses to issue 2Z tokens is completely programmatic and does not rely on human discretion. This approach ensures that token rewards are tied to actual outputs rather than promised outcomes. Since there is no entity controlling the distribution of tokens based on subjective decisions, there is no issuer-beneficiary relationship similar to the distribution of securities.

The network’s automatic reward model plays a key role in separating DePIN tokens from financial instruments that fall under the jurisdiction of the SEC. According to the no-action letter, the tokens will remain outside the scope of enforcement because they will be distributed based on performance and calculations, rather than promotional campaigns or speculative sales.

Legal basis depends on functional design, not market evaluation

DoubleZero’s legal filing was not an argument based on the market price or potential future value of the 2Z token. Instead, the legal team focused on the token’s operational role in supporting decentralized infrastructure. This argument held that the value participants receive is directly tied to the services they provide.

The SEC accepted this analysis and confirmed that whether a token qualifies as a security is determined by its economic function and not by its intended investor intent. As such, the authorities have found that the use cases for the 2Z token do not require registration under existing securities laws. The SEC’s no-action letter provides a reference point for other DePIN projects that use the token to incentivize resource sharing and service provision.

This confirms that if tokens are issued purely for functional purposes within the network without funding, speculative commitments, or centralized control, they may not be subject to federal securities regulation. This decision applies specifically to the structure and facts of DoubleZero. However, it does suggest a regulatory pathway for projects that use blockchain to coordinate distributed physical infrastructure such as bandwidth, energy, and mapping services.

Bottom line: SEC draws a clear line between activity-based tokens and securities

The SEC’s do-nothing response to DoubleZero outlines how feature-based token incentives can legally operate outside of the securities framework. This case demonstrates that token rewards do not meet the legal definition of a security if they are tied to the performance of a service, do not involve speculative investments, and are governed by automated rules.

This decision reflects a fact-based approach based on legal authority. It also suggests that regulators may approve new economic models as long as they do not circumvent investor protections built into securities laws.