The U.S. Securities and Exchange Commission (SEC) has signaled a willingness to refrain from enforcement actions against tokens tied to blockchain-based Decentralized Physical Infrastructure Networks (DePIN). This stance was conveyed through a no-action letter regarding the planned token launch of the DePIN project DoubleZero. Michael Seaman, chief counsel of the SEC's Division of Corporation Finance, stated he would not recommend enforcement action to the SEC.

DePINs involve using blockchain technology to coordinate and incentivize the building and maintenance of real-world infrastructure, such as storage, telecommunications bandwidth, mapping, or energy networks. Participants earn tokens for contributing resources or services to these networks.

SEC Commissioner Hester Peirce emphasized that the economic nature of DePIN projects differs significantly from traditional capital-raising activities that the SEC is tasked with regulating. She stated that the SEC was created to oversee securities markets, not to regulate all economic activity. She believes that treating DePIN tokens as securities would hinder the growth of distributed service provider networks.

The SEC's Seaman clarified that the programmatic transfers detailed by the DoubleZero Foundation do not necessitate registration under U.S. securities laws, and its planned 2Z token is not registered as a class of equity securities. DoubleZero's protocol facilitates blockchain systems' access to underutilized private fiber links managed by diverse contributors, with network participants being offered and sold the 2Z token.

Austin Federa, co-founder of DoubleZero, hailed the SEC's stance as a significant achievement, demonstrating that U.S. founders and innovators can collaborate with regulators to achieve clarity while maintaining momentum. Mari Tomunen, DoubleZero's general counsel, 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, suggesting that the Howey Test does not apply.

This move by the SEC is considered a rare one and is seen as part of a broader crypto enforcement rollback under the current administration, aiming to ease regulations to attract companies and projects to the U.S.

The SEC's recent stance offers an opportunity to consider how regulators can encourage innovation without overstepping their mandated boundaries. By focusing on the functional utility of tokens over speculative profits, safer markets can be created, filtering out unregistered securities and speculative tokens prone to fraud or volatility. The SEC's no-action letter for DoubleZero's 2Z token confirms that it is not classified as a security. This reduces uncertainty and encourages crypto businesses to innovate. With the SEC's distinction between utility tokens and traditional securities, projects can focus on building decentralized infrastructure without the worry of heavy regulatory compliance.