SEC staff clears path for DePIN in DoubleZero no-action
In a rare no‑action letter, the SEC’s Division of Corporation Finance said it will not recommend enforcement action against DoubleZero for distributing its 2Z token to network participants, provided the program runs as described. Commissioner Hester Peirce welcomed the move, saying DePIN tokens differ “fundamentally” from the capital‑raising deals Congress asked the SEC to police.
The letter, signed by Chief Counsel Michael P. Seaman on Sept. 29, 2025, states that – based on the facts in counsel’s submission – programmatic transfers of 2Z need not be registered under Section 5 of the Securities Act and that 2Z need not be registered as a class of equity securities under Section 12(g) of the Exchange Act. The staff stressed the usual caveat: a different fact pattern could lead to a different conclusion, and the response speaks only to enforcement discretion, not to a court’s legal finding.
Peirce’s accompanying statement frames why DePIN looks different. These projects coordinate real‑world infrastructure (storage, bandwidth, mapping, energy) through open networks and allocate tokens as compensation for work performed or services rendered, not as promises of profit from others’ efforts. In that “economic reality,” she wrote, the Howey test is not satisfied. Trying to treat such tokens as securities would suppress the growth of distributed service networks.
“Congress created the SEC to oversee the securities markets, not to regulate all economic activity,” she added.
DoubleZero says its protocol taps underutilized private fiber links contributed by participants to improve bandwidth and latency. Under its “proof of utility” design, providers who deliver capacity earn 2Z; validators pay to access the network. The 2Z distributions at issue are the programmatic rewards paid to active contributors according to preset rules.
Co‑founder Austin Federa cast the day as a turning point for U.S. crypto infrastructure. In his words, the staff’s stance confirms that “tokens are not inherently securities” when value flows from participants’ work rather than from buying into someone else’s managerial effort.
He said DoubleZero’s team spent four months working transparently with regulators (with Cooley LLP advising) and now has confidence to scale the network without tripping registration. More broadly, Federa argues the decision shows a workable path in the U.S. for functional tokens that pay for measurable utility, giving DePIN builders a template to engage the SEC and launch within the rules.
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