Breakthrough Regulatory Turning Point: SEC Announces DePIN Token "Fundamentally" Not Subject to Securities Law

The U.S. Securities and Exchange Commission (SEC) recently issued a rare "no-action letter," clearly determining that the 2Z Token of the decentralized physical infrastructure network (DePIN) project DoubleZero is not subject to securities laws, bringing a significant regulatory breakthrough to the Crypto Assets industry and marking a fundamental shift in the attitude of U.S. regulators towards functional Tokens.

SEC No-Action Letter: Defining Clear Boundaries Between Functional Tokens and Securities

Michael Seaman, the Chief Advisor of the Financial Division of the SEC, clearly stated in this landmark document that the Commission "will not recommend enforcement action against the token issuance of DoubleZero." This decision is based on an in-depth analysis of the nature of the 2Z token, which is believed to primarily serve the purpose of rewarding users for building physical network infrastructure such as private fiber optics, rather than acting as a passive investment tool.

This move is interpreted by the market as the regulatory agency's first official acknowledgment that contemporary coins are directly related to the construction of physical infrastructure, and that holders need to actively participate rather than just rely on the efforts of others; in such cases, these types of Tokens may not meet the definition of securities.

Significant Shift in Regulatory Philosophy

SEC Commissioner Hester Peirce emphasized the far-reaching significance of this decision in a subsequent public statement: "The economic substance of DePIN projects fundamentally differs from capital raising transactions regulated by this Commission, and classifying them as securities would stifle the growth of distributed service networks."

This position marks a shift in regulatory thinking from the previous comprehensive blockade to a more nuanced classification regulation, which is highly consistent with the "functional vs. speculative" token distinction framework proposed by the new SEC Chairman Paul Atkins, and echoes the legislative direction of the CLARITY Act being promoted by Congress.

DePIN Model: A New Paradigm Disrupting Traditional Howey Test

The traditional "Howey Test" has always been the main basis for the SEC to determine whether a token is classified as a security, with its core focus on whether investors "primarily rely on the efforts of others to profit." However, the token allocation mechanism under the DePIN model is fundamentally different from this:

Active participation rather than passive investment: Users must personally deploy or maintain physical equipment.

Contribution-driven rather than speculation-driven: Token rewards are directly linked to the actual services provided.

Physical infrastructure rather than pure digital assets: the project results in a visible, measurable physical network.

These features make DePIN tokens functionally closer to "proof of work" or "service certificates," rather than traditional investment contracts.

Market Impact and Industry Outlook

Austin Federa, co-founder of DoubleZero, stated regarding this decision: "This is not just a milestone for DoubleZero, but it also proves that American innovators can move forward quickly while collaborating with regulatory agencies."

This regulatory breakthrough is expected to bring multiple impacts to the DePIN field:

· Capital inflow accelerates

As legal risks decrease, venture capital and institutional investors will be more confident in investing in DePIN projects, especially those focused on physical infrastructure such as telecommunications, energy, and data storage.

· Business Model Innovation

Clear regulatory boundaries will encourage more entrepreneurs to explore the business model of "real contributions in exchange for tokens," potentially sparking a new wave of infrastructure innovation.

· Improved Competitiveness in the United States

In the global crypto regulatory competition, this decision may help the United States to regain crypto innovators and capital that have flowed to other jurisdictions due to regulatory uncertainty.

Key Points for Ongoing Observation

Despite this significant breakthrough, the market still needs to pay attention to several key issues:

Scope of Application: The no-objection letter does not automatically apply to all DePIN projects; other projects still need to be evaluated based on their own characteristics.

Secondary Market Regulation: How the SEC and CFTC coordinate the regulation of token trading remains to be clarified.

Disclosure Requirements: Functional token issuers are still required to disclose the token's functions, user rights, and risks in detail.

It is worth noting that the SEC recently withdrew its lawsuit against another DePIN project, Helium, further confirming the systematic shift in regulatory attitude.

Conclusion: A New Balance Between Regulation and Innovation

The SEC's determination of the DoubleZero Token has created a new paradigm for crypto regulation, delineating a clearer boundary between functional tokens and securities. This decision not only injects new momentum into the DePIN sector but also provides regulatory clarity for the entire crypto industry.

As the policy environment gradually clarifies, there is hope for a new balance between innovation, capital, and regulation, opening up broader development space for the application of blockchain technology in the physical world.