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- The SEC grants a no-action letter, clearing DoubleZero’s 2Z tokens from U.S. securities regulations.
- 2Z tokens serve as rewards, not investments, confirming their status outside securities laws.
- The ruling sets a precedent for future DePIN projects, offering clarity for blockchain innovation.
The U.S. Securities and Exchange Commission (SEC) has granted a relatively exceptional no-action letter clearing the DePIN tokens of the DoubleZero of the U.S. Act securities regulations. Following the announcement on September 29, the blockchain-based project will move forward without the threat of regulatory enforcement. This indicates a dramatic shift in the approach of the SEC towards tokenized infrastructure.
The Division of Corporation Finance has confirmed that the 2Z token, which is the native token of DoubleZero, is not classified as a security, according to the SEC. The SEC said in a letter that it would not enforce action should DoubleZero go ahead with its planned token transfers, as described in its submission on September 25. The move is a victory for the rising decentralized physical infrastructure (DePIN) industry.
SEC Clears 2Z Tokens as Operational Rewards
The legal team at DoubleZero said that the 2Z token is not an investment product. Rather, it acts as a reward in the network. The token will be allocated to Network Providers that will offer connectivity and Resource Providers that will calculate provider payment. The programmatic transfers will enhance the protocol’s effectiveness and will not need to be registered as securities.
This ruling makes the DePIN tokens unique compared to customary investment models. These, unlike stock or profit-sharing facilities, are practical incentives. They seek to pay to engage the participants with physical resources; these might include bandwidth, storage, or energy. The SEC has determined that they will not be classified under securities laws, concluding that they are operational rewards rather than investment products.
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DePIN is a blockchain-based project, such as DoubleZero, that offers tokens on the basis of sharing its resources. The 2Z tokens will be awarded to individuals who will volunteer these services. Blockchain networks are gaining popularity, positioning this model as a decentralized alternative to traditional systems.
The Role of DePin Tokens in Supporting Network Growth
Hester Peirce, the SEC Commissioner, concurred with the ruling by stating that it would be against the growth of decentralized networks to consider the DePIN tokens as securities. She characterized these as neither shares of stock nor discussions of profits. Rather, there have been practical incentives to push the infrastructure development.
Source: SEC
Mari Tomunen, a general counsel of DoubleZero, agreed with this opinion. She says that the token value that had been earned by the efforts of network members fails to satisfy the definition of a security. Her remarks support the claim that 2Z tokens do not qualify as investment products.
This SEC ruling may be used as precedent in future DePIN projects. It signals a shift in regulations regarding blockchain innovation within decentralized infrastructure.
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