SEC Signals No Enforcement Action on DePIN Tokens

According to Cointelegraph, the U.S. Securities and Exchange Commission (SEC) has indicated it will not pursue enforcement actions against tokens associated with blockchain-based Decentralized Physical Infrastructure Networks (DePIN). This decision was communicated through a no-action letter issued by Michael Seaman, chief counsel of the SEC's Division of Corporation Finance, who stated that he would not recommend enforcement action for the planned token launch of the DePIN project DoubleZero. SEC Commissioner Hester Peirce emphasized that the economic reality of DePIN projects fundamentally differs from the capital-raising transactions that Congress tasked the Commission with regulating. This no-action letter is a rare move by the SEC and reflects the agency's ongoing crypto enforcement rollback under the Trump administration, which aims to ease regulations to attract companies and projects to the United States. The SEC's Seaman clarified that the programmatic transfers detailed by the DoubleZero Foundation do not require registration under U.S. securities laws, and its planned 2Z token is not registered as a class of equity securities. DoubleZero's protocol allows blockchain systems to access underutilized private fiber links managed by various contributors, with network participants being offered and sold the 2Z token. Austin Federa, co-founder of DoubleZero, expressed that this development is a significant milestone, demonstrating that U.S. founders and innovators can collaborate with regulators to achieve clarity while maintaining momentum. DoubleZero's general counsel, Mari Tomunen, noted that the SEC's no-action letter highlights a path to launching a token when its value is derived from the work of other network participants, indicating that the Howey Test does not apply. Commissioner Peirce remarked that the no-action letter provides an opportunity to consider how regulators can encourage innovation without overstepping the boundaries set by Congress. She reiterated that the SEC was established to oversee securities markets, not to regulate all economic activities. Peirce further explained that DePIN tokens serve as functional incentives to encourage infrastructure development and are not shares in a company or promises of profit from others' efforts, which would classify them under securities laws. Treating such tokens as securities, she argued, would hinder the growth of networks of distributed service providers. Peirce concluded that blockchain technology cannot achieve its full potential if regulators force all activities into existing financial market regulatory frameworks. Despite the SEC's decision, DePIN tokens did not show a positive market reaction, with CoinGecko reporting a 2% loss in the market segment over the past day.