🚨 On September 29, 2025, the SEC’s Division of Corporation Finance issued a rare no-action letter regarding the
#DoubleZero o project and its 2Z token. Based on the submitted facts, the SEC will not recommend enforcement actions for token distribution, provided the outlined procedures are followed. This marks the first notable precedent for a DePIN/utility token in the U.S.
What SEC Allowed (In Essence)
• The SEC determined that, under the specific conditions outlined by DoubleZero (Foundation structure, token distribution method, no traditional fundraising, and no control rights for holders), the 2Z token—under these practices—will not be recommended for enforcement as a security. This relief hinges on adhering to the specified restrictions, with no initiation of enforcement actions.
Breakdown of the 2Z Token Model—Why It Worked
1. Not Fundraising, But Network Rewards
2Z is designed as a programmatic reward for infrastructure participants (
#DePIN ), not as an equity stake or profit promise from third-party efforts—key to passing the Howey Test.
2. Foundation and Distribution Model
The project established a memberless Cayman Foundation and detailed an algorithmic token distribution, reducing arguments of centralized sales or investment.
3. Restrictions and Facts in the Letter
The no-action relief is tied strictly to the submitted facts and commitments (e.g., token rights, issuance process, no profit vouchers). Any deviation could void this protection.
Legal Logic: How It Aligns with the Howey Test
The SEC effectively acknowledged that, under these circumstances, key Howey Test elements—particularly the expectation of profit from third-party efforts and a typical investment model—are not met. This is not a universal template but a fact-specific ruling.
Implications for Other Startups (Quick Take)
• Positive: This precedent signals that collaboration with the SEC and transparent token architecture can yield clarity and reduce enforcement risks, potentially unlocking DePIN/utility token launches in the U.S. with careful legal structuring.
• Limitation: It’s not a blanket approval—relief is detail-dependent. Other projects must prepare thorough facts and adopt similar guardrails.
Practical Recommendations for Projects and Teams
1. Document Everything Factually: Detail how and to whom tokens are distributed, their purpose, and rights not granted to holders (no-action is fact-driven).
2. Avoid Fundraising via Tokens: Use transparent grants/rewards instead of sales for utility positioning.
3. Legal Buffer: Proactively engage regulators (Q&A, pre-sessions), but strategically.
4. Technical/Operational Independence: Prove the network operates independently of team promises (DePIN reliability).
☝️ Risks and Caveats
• The no-action letter applies to specific facts; altering the model, distribution, or commercial practices could prompt SEC reevaluation.
• Publication signals the market but doesn’t exempt AML/KYC or other regulatory requirements.
🤔Conclusion:
DoubleZero has carved a viable path: transparency, programmatic distribution, and clear utility positioning secured a rare SEC clarity. This is a landmark precedent, but it doesn’t greenlight the ecosystem—projects must meticulously design tokenomics and document facts to leverage similar protection.
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