The Securities and Exchange Commission indicates that it will not take enforcement action against tokens tied to blockchain-based decentralized physical infrastructure networks (DEPINs).
In a non-action letter Monday, the SEC division of Corporation Finance’s chief advisor Michael Seaman said it would not recommend enforcement action” to the SEC for the launch of the planned tokens for Depin Project Doublezero.
SEC Commissioner Hester Peirce separately added: “The economic reality of the Depin Project is fundamentally different from the capital-raising transactions that the Commission has requested regulation.”
The rare and invalid letter from the SEC is the latest example of an agency of crypto-enforcement rollbacks under the Trump administration, pledging to ease the attraction of businesses and projects to the United States.
DoubleZero tokens are not security
SEC’s Seaman said the DoubleZero Foundation, detailed in Thursday’s letter, does not require registration under the U.S. Securities Act, and the program transfer that the planned 2Z tokens are “not registered as a class of equity securities.”
DoubleZero said in its letter that the protocol allows blockchain systems to access “underutilized private fiber links” managed by various contributors. Network participants will be provided with 2Z tokens and sold.
“This is more than a DoubleZero milestone. It’s proof that US founders and innovators can work with regulators to achieve clarity and still move fast,” said Austin Federa, co-founder of DoubleZero and former strategy lead for the Solana Foundation.
sauce: Austin Federa
Doublezero adviser Mari Tomunen said that the SEC’s non-action documents “emphasize that there is a way to launch tokens. Howey simply does not apply when the value of a token comes from the work of other network participants.”
The SEC “does not regulate all economic activities.”
SEC’s Peirce said the non-action letter “provides an opportunity for regulators to reflect on how Congress can promote innovation without expanding its scope beyond what is mandatory.”
“Parliament has established the Securities and Exchange Commission to oversee the securities market rather than regulating all economic activities.”
She added that the agency’s position allows crypto infrastructure providers to “expend time deep in the weeds that build infrastructure, not knee depth when analyzing the nuances of securities law.”
Depin token policing suppresses the market
Peirce said Depin Tokens is “a functional incentive designed to promote infrastructure build-out,” and it also promises profits from the efforts of others captured under the securities law, rather than the stock of a company.
“These projects allocate tokens not as investments, but as compensation for work or services carried out, in the hopes of benefits from other people’s entrepreneurs or management efforts,” she explained.
“Treating these tokens as securities will curb the growth of the network of distributed providers of services.”
Peirce said blockchain technology cannot reach its full potential if regulators “force all activities into existing financial market regulatory frameworks.”
Depin Tokens appears to have not responded to the SEC decision, indicating that Coingecko is showing tokens tied to market segments.
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