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Regulation

SEC Issues No-Action Letter for DoubleZero DePIN Token Classification

SEC guidance clarifies DePIN utility token status, establishing a critical precedent for compliant decentralized infrastructure development.
October 5, 20253 min

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Briefing

The U.S. Securities and Exchange Commission (SEC) recently issued a no-action letter to DoubleZero, a decentralized physical infrastructure network (DePIN) platform, confirming that its 2Z utility token’s programmatic transfers do not qualify as securities transactions. This action provides a crucial regulatory pathway for DePIN projects to operate within the U.S. without facing immediate enforcement actions for unregistered securities offerings. The letter, issued on September 29, 2025, specifically exempts DoubleZero’s 2Z token from registration as an equity security.

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Context

Prior to this development, the digital asset industry, particularly projects involving utility tokens and decentralized networks, faced significant legal ambiguity regarding token classification. The prevailing compliance challenge stemmed from the inconsistent application of the Howey Test, leaving many token issuers uncertain whether their tokens would be deemed unregistered securities. This uncertainty often stifled innovation and limited the ability of decentralized projects to operate and distribute tokens within the United States.

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Analysis

This no-action letter significantly alters compliance frameworks for DePIN projects and other utility-focused token issuers. It provides a clearer regulatory pathway, reducing the burden of potential securities registration for tokens integral to network functionality. Regulated entities can now develop product structuring and token distribution models with greater confidence, understanding that tokens designed purely for programmatic network incentives may fall outside securities purview.

This clarity fosters innovation by enabling projects to build decentralized infrastructure without immediate enforcement risk from the SEC. The SEC’s determination that 2Z tokens do not meet the Howey Test, as their rewards are driven by participant efforts rather than DoubleZero’s promotional activities, offers a valuable guidepost for future projects.

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Parameters

  • Issuing Authority ∞ U.S. Securities and Exchange Commission (SEC)
  • Regulatory Instrument ∞ No-Action Letter
  • Targeted Entity ∞ DoubleZero (DePIN platform)
  • Asset Type ∞ 2Z Utility Token
  • Legal Standard Applied ∞ Howey Test for securities classification
  • Effective Date of Letter ∞ September 29, 2025

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Outlook

This no-action letter sets a crucial precedent, potentially encouraging more DePIN projects and other utility token issuers to seek similar guidance from the SEC. It signals a nuanced approach from the regulator, recognizing the functional distinction of certain blockchain-native tokens. This action could stimulate innovation in decentralized infrastructure development within the US, potentially influencing future legislative efforts to create more tailored regulatory frameworks for digital assets that are not investment contracts. Commissioner Hester Peirce noted that this guidance paves the way for further experimentation, asserting that markets, not financial regulators, should determine the success of crypto projects.

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Verdict

The SEC’s no-action letter to DoubleZero decisively advances regulatory clarity for utility tokens within decentralized physical infrastructure networks, fostering a more predictable environment for digital asset innovation and compliant market participation.

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decentralized physical infrastructure

Definition ∞ Decentralized physical infrastructure refers to real-world assets and services managed and operated by a distributed network rather than a single entity.

unregistered securities

Definition ∞ Unregistered securities are financial instruments, such as stocks or bonds, that have not been formally registered with a relevant regulatory authority, like the Securities and Exchange Commission (SEC) in the United States.

compliance frameworks

Definition ∞ Compliance Frameworks are sets of rules, standards, and guidelines that entities must adhere to in order to operate legally and ethically within a specific jurisdiction or industry.

decentralized infrastructure

Definition ∞ Decentralized infrastructure comprises systems and services that are not controlled by a single entity or point of authority.

securities

Definition ∞ Securities are financial instruments representing ownership in a corporation, a creditor relationship with an entity, or rights to ownership.

no-action letter

Definition ∞ A no-action letter is a formal communication from a regulatory agency stating that it will not recommend enforcement action against a party for a specific proposed activity.

depin

Definition ∞ DePIN, an acronym for Decentralized Physical Infrastructure Networks, represents a category of blockchain-based projects that incentivize the collective contribution of physical resources.

utility token

Definition ∞ This is a type of digital token designed to provide its holder with access to a specific product or service within a particular ecosystem.

howey test

Definition ∞ The Howey Test is a legal standard originating from a US Supreme Court case, used to determine if a transaction constitutes an investment contract and thus a security subject to federal regulation.

depin projects

Definition ∞ DePIN Projects represent decentralized networks that incentivize individuals to build and operate physical infrastructure using blockchain technology.

regulatory clarity

Definition ∞ Regulatory clarity refers to a state where the rules and guidelines governing a particular industry or activity are clear, consistent, and easily understood by all participants.

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