Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
SEC Clears Fuse Token In New Crypto Decision
Crypto Regulation | Nov 25, 2025
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A New Reference Point for Behaviour-based Token Design
On November 24 2025, the US Securities and Exchange Commission (SEC) Corporate Finance Division issued a no action letter to Fuse Crypto Limited that sets the conditions under which the company can offer its ENERGY token without triggering US securities registration under Section 5 or reporting requirements under Section 12(g). This action gives the market a detailed example of how a behaviour based reward token can satisfy regulators when the program avoids speculation and ties all earning activity to user actions.
What The SEC Reviewed And The Conditions Behind Its Relief
The SEC based its position on the facts described in the request for relief letter that Fuse’s counsel submitted on November 19 2025 (13 page PDF). The filing outlines how the program works how users earn tokens and how redemption value is controlled. The SEC makes clear that any different facts or conditions could lead to a different conclusion.
Fuse’s submission describes a program that rewards users for energy related behaviour that supports distributed energy resources. Users earn tokens when they install and connect rooftop solar systems, batteries, electric vehicle chargers or similar equipment. They also earn tokens when they make this equipment available for grid supportive functions or adjust consumption to help reduce stress on local systems. These actions are measurable and tied directly to the program.
See: Coinbase Opens a New Chapter for Token Sales
The submission explains the formula Fuse uses to allocate token rewards. The formula measures user generated energy behaviour and applies a fixed structure that determines the number of tokens a user receives. This formula must remain constant. The SEC notes that it depends on this structure when evaluating whether the program’s value creation resembles investment activity.
The filing also states that redemption value is capped. Users may redeem tokens only for goods or services the program makes available at the time of redemption. The value cannot exceed Fuse’s profit margin and redemption depends on average market pricing. This removes speculative upside and keeps the token tied to consumption.
The submission also details that Fuse will present the program as a rewards system and not as an investment, and that all earning activity must flow from how users participate in the program. Users configure their preferences inside the app to enable token earning and select the settings that determine how their connected energy resources take part in the program. The filing states that token rewards come only from this participation and from measurable energy related behaviour, and that all value remains tied to capped redemption and consumptive use rather than to any form of investment activity.
The program does not give token holders any right to profit sharing future income ownership or governance. All value comes from user behaviour and redemption inside the program.
See: Are Your Tokens Securities? New EU Rules Say Maybe
These conditions help regulators understand that the token does not function like a security. The SEC confirms that its relief applies only to these facts and does not classify the token.
How The Program Works
The Fuse program connects token creation to real actions that support distributed energy systems. Users earn tokens directly from participation and do not buy them with investment expectation. The structure ties value to measurable behaviour and redemption uses a strict cap based on profit margin and market pricing. This design prevents investor style appreciation and aligns the token with its use as a reward.
This event gives issuers a detailed reference for designing behaviour based programs. Many token projects claim utility status but still allow value growth that resembles investment behaviour. Fuse provides an example of how limits on value, transparent formulas, and consumption use can support compliance.
The program also shows that clear documentation matters. Fuse’s submission provides detailed explanations of user actions, redemption rules, promotional commitments, and technical configuration.
Regulators rely on this specificity when evaluating whether a token program functions as a financial product. Fintech teams building similar programs can use this model to see how clear rules and measurable user actions help regulators understand how the system works.
Can This Work in Canada?
The SEC decision gives Canadian fintechs a good example of how American regulators analyze behaviour-based token programs. Canadian regulators continue to rely on the economic reality approach as set out in the CSA staff notice 46-308 on token classification published June 11 2018. While no formal newer guidance appears to have been issued publicly, issuers should monitor for any updates.
This guidance explains that labels do not determine the legal outcome. Regulators examine the purpose of a token how it enters circulation how users receive value and whether promotional language creates investment expectation.
See: Quebec Decision Challenges Canada’s Crypto Rules
The Fuse no action letter and submission model aligns with these principles. It shows how programs that tie value to specific actions and use measurable formulas can reduce regulatory risk. Canadian issuers designing clean energy mobility or infrastructure incentives can benefit from reviewing the program and understanding how to document participation value mechanics and redemption paths in a compliant manner.
Many Canadian fintechs build products that operate in both markets. The SEC decision provides a reference for how US regulators evaluate tokenized reward-based systems. Canadian teams could use the US-based Fuse decision to prepare materials that align with principles used in both countries.
What Could Still Change And Why The Relief Is Conditional
The No Action Letter applies only to the facts Fuse described in its incoming letter. If Fuse changes earning mechanics, redemption formulas, user eligibility, promotional language, or transferability rules the SEC may reach a different conclusion. The relief applies only to Section 5 and Section 12(g) and does not bind other regulators. The No Action Letter also doesn't prevent actions by other divisions inside the SEC or by other agencies such as the CFTC, FinCEN, IRS or state regulators.
Canadian regulators may also reach a different outcome if facts differ from the submission or if market behaviour creates investor style expectations. The SEC’s letter does not classify the token. It only describes the enforcement position for the facts presented.
Conclusion
The SEC's corporate finance decision on the Fuse reward program gives fintechs a detailed look at how behaviour based tokens can meet regulatory expectations when value comes from measurable user actions and redemption is tightly controlled.
See: The Role of a Crypto Wallet in Canada’s Digital Finance Future
Canadian fintechs designing cross-border token programs can use the Fuse no action event to help design programs and prepare materials that address the economic reality tests used in Canada. As more companies explore real world token models this type of clarity supports innovation and helps developers understand how to design programs that balance consumer incentives with regulatory confidence.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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