Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
SEC Opens Door for DePIN Tokens with DoubleZero Ruling
Digital Asset Regulation | Oct 1, 2025
Image: Freepik
DoubleZero Ruling Letter Clarifies How Functional DePIN Tokens May Fall Outside Securities Law
On September 29, 2025, the U.S. Securities and Exchange Commission (SEC, Corporate Finance Division) issued a no action letter for DoubleZero that addresses how decentralized physical infrastructure networks (DePIN) should be treated under securities law.
See: US House Pushes Crypto Reform Forward with Key Bills
The SEC's staff concluded that tokens earned by providing infrastructure services did not need to be registered as securities. Commissioner Hester Peirce reinforced this position in a follow-up statement, where she described DePIN tokens as rewards for real work rather than investments reliant on others’ managerial efforts.
What is DePIN and Why It Matters for Blockchain Builders
DePIN refers to decentralized physical infrastructure networks where people contribute bandwidth, storage, mapping, or energy and receive tokens in return. These networks create open marketplaces for infrastructure and reduce reliance on centralized ownership.
Peirce (aka Crypto mom) described this approach as a new way to organize services using blockchain technology. She argued that tokens functioning as rewards for services are economically distinct from securities and that forcing all blockchain models into securities law could suppress innovation.
Features That Helped DoubleZero Get No-Action Relief
DoubleZero avoided the pitfalls of speculative fundraising from token sales marketed with profit expectations. Instead of pre-selling tokens to investors, its 2Z token was earned by participants who contributed infrastructure services, such as bandwidth, storage, and node operation.
See: SEC Exploring Ethereum Standard for Tokenized Securities
The SEC staff stated that it would not recommend enforcement if tokens were distributed under the programmatic model presented by counsel. The relief granted was narrow and applied only to the programmatic model where tokens were distributed automatically to contributors per present conditions.
The letter also made clear that different facts could lead to a different outcome. You can read DoubleZero's response to the no-action letter here.
Where Similar Reasoning Might Apply?
In the vein of avoiding token fundraising and keeping distributions tied to real services, networks that reward participants for sharing unused internet bandwidth, provide hard drive capacity, or feed energy into microgrids could potentially align with this reasoning. Other applications might include mapping and geospatial services, where users are rewarded for validated data contributions.
By contrast, projects that conduct presales or ICOs with promises of speculative returns, rely heavily on centralized managerial efforts, or direct most tokens to investors rather than active participants are less likely to qualify. The SEC emphasized that the economic reality must be compensation for work or services, not profit expectations.
Closing Thought
While Canada hasn't yet issued specific guidance for DePIN tokens, the DoubleZero letter offers a comparison that Canadian entrepreneurs and policymakers can evaluate when distinguishing between functional reward tokens and investment contracts.
See: SEC Clears Path for Fast Track Crypto ETFs
It's another clear acknowledgement from the SEC that not all tokens should be treated as securities. For builders, it shows how models tied to infrastructure participation can be designed to avoid speculative classification.
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 aa 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
 |  |  |
|---|---|---|
 |  |  |
Leave a Reply