Briefing
The U.S. Securities and Exchange Commission (SEC) Staff granted no-action relief to the DoubleZero Foundation, establishing a clear, operationalized blueprint for structuring utility tokens in the Decentralized Physical Infrastructure (DePIN) sector outside of federal securities registration. This action provides critical legal certainty for a functional asset model, allowing network developers to proceed with adoption-focused token distributions. The relief specifically applies to the token’s “Programmatic Transfers” for network usage and security staking, affirming a non-security status for a token tied directly to network utility.
Context
The prevailing compliance challenge for all functional digital assets has been navigating the ambiguous “expectation of profit” prong of the Howey test without explicit regulatory guidance. This legal uncertainty forced decentralized network developers to rely on costly private legal opinions or risk potential enforcement for unregistered securities offerings. The DePIN sector, which relies on tokens to incentivize and pay for real-world infrastructure (like fiber capacity), lacked a specific, public precedent for tokens used to both secure the network and serve as the medium of exchange for its underlying service.
Analysis
This no-action letter directly alters the product structuring and compliance frameworks for all decentralized network projects, particularly those leveraging physical infrastructure. By explicitly accepting that tokens used for network access and staking to secure a functional network are non-securities, the SEC Staff has provided a clear, actionable path to compliance. This dramatically reduces the legal risk profile for DePIN and other functional utility projects, enabling them to scale network adoption and capital deployment without the prohibitive costs and complexity of federal securities registration. Regulated entities can now model their compliance controls and token economics against this specific, successful framework, which prioritizes technical utility over passive investment expectation.
Parameters
- Action Type ∞ No-Action Relief (Staff-level guidance, not formal rulemaking).
- Legal Exemption Granted ∞ Registration under Section 5 and 12(g) of the Securities and Exchange Acts.
- Core Token Functionality ∞ Programmatic Transfers (Distribution tied to network usage/security staking).
- Response Date ∞ September 29, 2025 (Date of SEC Staff response).
Outlook
This staff guidance is immediately positioned to serve as the de facto “safe harbor” model for future utility token structuring, likely leading to a surge in DePIN and other functional decentralized network launches that mirror the DoubleZero structure. The precedent will influence pending market structure legislation, such as the Clarity Act, by demonstrating a practical, staff-level approach to token taxonomy that differentiates between utility and investment contracts. This regulatory clarity is expected to accelerate institutional investment and adoption by providing a vetted legal foundation for a high-growth sector of the digital asset market.
Verdict
The SEC Staff’s formal recognition of a functional DePIN token as a non-security provides a durable legal framework that strategically de-risks utility token issuance and unlocks significant capital formation for decentralized infrastructure projects.
