Simply put
- The SEC has given a “no action” letter to the Solana-based project, DoubleZero.
- The regulator indicated that the 2Z tokens do not resemble securities.
- The token is set to launch on Friday with the Mainnet release.
The U.S. Securities and Exchange Commission (SEC) issued a “No Action” letter to DoubleZero on Monday, which essentially offers a green light for the project’s 2Z token ahead of its launch in Solana.
In a statement, the committee clarified that it does not recommend any enforcement actions against DoubleZero. The company, formed last year, utilizes tokens to encourage participation while developing a high-performance fiber optic network on the blockchain.
The two-paragraph letter demonstrated that, according to DoubleZero’s explanation, the 2Z token does not align with the characteristics of a security. This marks the first time the SEC has made such a determination after years of strict oversight on token issuers under previous leadership.
Just days later, DoubleZero submitted a comprehensive 17-page letter, in which the committee encourages network users to consider “program forwarding.”
Former SEC Chairman Gary Gensler had once asserted that “everything other than Bitcoin” could be considered a security in the crypto space, but the agency’s recent action suggests that they do not perceive 2Z in that light.
“In essence, we establish a safe harbor based on a set of understood facts,” Graves noted, reiterating a point made in Decryption. “This helps everyone work a bit more clearly.”
DoubleZero’s MainNet-Beta is expected to launch this Friday. Users contributing resources to the network will earn 2Z tokens as rewards tied to performance and reliability. Ultimately, token holders can stake 2Z based on what DoubleZero describes in their website.
The project was co-founded by Austin Federa, who previously held the role of Strategic Director at the Solana Foundation. In a statement, he described the SEC’s decision as a significant milestone for the U.S. digital assets sector.
Miller Whitehouse-Levine, CEO of the Solana Policy Institute, mentioned to Decryption that this is not only vital for one company but also provides the needed legal clarity and certainty to foster an innovation wave across distributed networks. “A no action letter serves as a practical bridge between builders and regulators,” he added.
DoubleZero positions itself as a distributed physical infrastructure network, known as depin. This idea revolves around using blockchain for managing and operating a distributed network of physical hardware, such as sensors.
In a statement, Hester Peirce, a key figure in the effort to modernize securities regulations, explained that tokens can serve various purposes compared to the assets typically governed by the Depin Project.
“These tokens don’t promise company shares or profits based on the management of others,” she explained. “They are functional incentives aimed at fostering infrastructure development.”
Arie Trouw, co-founder and CEO of the Depin Project Xyo, remarked to Decryption that the letter signifies a positive sign that regulators are starting to acknowledge the unique aspects of such projects.
“These initiatives do not fit neatly into traditional securities frameworks since they are not focused on speculative fundraising. They aim to motivate individuals to build real-world infrastructure through participation,” he stated.
Trouw added that Depin Networks is projected to expand from a current market range of $3,000-$50 billion to approximately $3.5 trillion by 2028, according to the World Economic Forum’s Technology Convergence Report. “In order to achieve that potential, innovators and communities need the freedom to operate without the constant worry of regulatory misclassification,” he said.
“In these contexts, tokens are not promises of dividends,” Trouw continued. “They are practical rewards designed to compensate participants for their contributions and aid in global infrastructure distribution. Treating them as securities threatens innovation as Depin demonstrates its capability to transform markets in telecommunications, logistics, energy, and more.”
This marks the first time the SEC has provided a no action letter for a crypto project, yet Graves emphasized that the agency’s recent stance is “very important.”
He recalled a prior no-action letter from 2019, which allowed a company named Turnkey Jet to offer tokens that could be redeemed for private jet flights on demand.
“That’s not exactly within the SEC’s primary concerns,” he stated. “However, anyone buying those tokens for jet flights can do so with a level of confidence that there won’t be any securities law violations involved.”
The SEC’s letter pointed out several factors, such as Turnkey Jet’s commitment not to use token sales for platform development and to limit the transferability of tokens, thereby tying their marketing to specific functionalities.
DoubleZero raised $28 million in March this year during a funding round led by Multicoin Capital and Dragonfly, which was followed by additional investment from Galaxy in August.
This move signifies a shift in the SEC’s approach to digital assets. Recently, regulators seem to have softened their previously aggressive stance on enforcement actions since the return of President Trump.
Several notable cases, including actions against Coinbase, Ripple, and Kraken, have been either dropped or scaled back significantly.
