SEC Grants DePIN Project 'Regulatory Cover' with No-Action Letter

SEC Issues Second No-Action Letter to DePIN Project

The Securities and Exchange Commission (SEC) has issued its second "no-action letter" to a decentralized physical infrastructure network (DePIN) crypto project in recent months, effectively providing its native token with “regulatory cover” from potential enforcement actions. This letter was specifically directed towards Fuse, a Solana-based DePIN project that rewards network maintainers with its FUSE token, which is not sold directly to the public. Fuse initially submitted a request to the SEC’s Division of Corporation Finance on November 19th, seeking official confirmation that the agency would not recommend enforcement action if the project continued to offer and sell FUSE tokens. Their submission emphasized that FUSE is designed for network utility and consumptive purposes, explicitly excluding speculative intent. The token's redemption is limited to the average market price through third parties. Jonathan Ingram, Deputy Chief Counsel of the Division of Corporation Finance, stated on Monday, "Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion as counsel, Fuse offers and sells the Tokens in the manner and under the circumstances described in your letter."

Second No-Action Letter Follows New SEC Leadership

This no-action letter follows closely on the heels of a similar letter granted to Double Zero, signaling a potentially more crypto-friendly stance under new leadership at the SEC. As DoubleZero co-founder Austin Federa noted, such letters are common in traditional finance (TradFi) but exceedingly rare in the cryptocurrency space. He described the process as "months long," adding that the SEC was "quite receptive, professional, and diligent," and that there was a notable absence of "crypto animosity." The SEC underwent a leadership change in April with the appointment of Paul Atkins as the 34th chairman. Since then, the agency has appeared to be adopting a more balanced approach to cryptocurrency regulation. Hester Peirce, known for her pro-crypto views, also heads the agency’s crypto task force.

SEC No-Action Letters Provide Regulatory Clarity

Rebecca Rettig, legal representative for Solana MEV infrastructure platform Jito Labs, highlighted the significance of no-action letters (NALs) for crypto projects on X. “Why do crypto teams want them? ‘Regulatory clarity.’ If you're planning to issue a token, a NAL provides reasonable assurance you won’t face immediate enforcement for violations of securities laws. It’s a kind of ‘regulatory cover,’” she wrote.

Crypto Lawyer: SEC's Stance on Fuse Was Expected

Consensys lawyer Bill Hughes commented on the matter via X, stating that the decision was "an easy case" given the nature of the Fuse token. He added, "The takeaway is that there is not a lawyer in crypto that would have thought this token was a security. And maybe not even any lawyer who is merely familiar with Howey."

Crypto Founders Applaud SEC's New Direction

After facing what many US crypto founders and businesses perceived as hostility from the SEC under former chair Gary Gensler, the recent interaction with Fuse suggests a significant shift in the agency's approach. In the same month that Double Zero received its no-action letter, the SEC also issued a similar letter for crypto-custodians not classified as banks. While these custodians must still adhere to strict conditions, the letter provides clear guidelines for acceptable practices, a demand that the industry has been advocating for in recent years.