This development surfaces numerous months following a comparable no-action letter issued by the SEC to DoubleZero, which was regarded as a vital regulatory achievement for DePIN initiatives.
The SEC has recently released its second “no-action letter” directed at a decentralized physical infrastructure network (DePIN) digital asset venture in recent memory. This action grants its proprietary token “regulatory protection” against potential enforcement, it was observed.
The no-action correspondence was dispatched to the Solana DePIN initiative Fuse, which distributes a network token, FUSE, as a recompense to individuals actively sustaining the network, it was noted.
A document was initially presented by Fuse to the SEC’s Division of Corporation Finance on November 19, requesting formal assurance that the SEC would not endorse “enforcement measures” if FUSE tokens continue to be exchanged on independent digital venues.
Fuse furthermore specified in its communication that FUSE was created for network utility and consumption functions, distinct from speculative intent. The token can only be exchanged for an average market valuation through external intermediaries.
“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,”
wrote Division of Corporation Finance’s deputy chief counsel, Jonathan Ingram, on Monday.
The most recent no-action correspondence from the SEC arrives merely several months after a comparable, “highly desired” letter was transmitted by the commission to Double Zero. This action was viewed as an outcome of a revised, more accommodating administration within the SEC.
At that specific period, DoubleZero co-founder Austin Federa articulated that such correspondence is prevalent within conventional finance, yet is considered “exceptionally scarce” within the decentralized digital assets sector.
“It was a months long process, but we found the SEC to be quite receptive, we found them to be quite professional, quite diligent, there was no crypto animosity.”
New leadership was instilled at the SEC in April, subsequent to Paul Atkins being inaugurated as the 34th chairman. The regulatory body has since been observed adopting a more equitable stance toward digital assets. Additionally, crypto-friendly Hester Peirce also directs the agency’s specialized crypto task force.
SEC No-Action Letters Provide a Measure of Regulatory Clarity
Contributing to the discourse on X, Rebecca Rettig, a legal counsel for the Solana MEV infrastructure platform Jito Labs, mentioned that no-action correspondence is pursued by numerous digital asset ventures, it was noted.
“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 Says SEC’s Approval of Fuse Was Not Unexpected
The no-action correspondence does not inherently establish any new benchmarks, it should be noted.
Offering commentary on the matter through X on Monday, Consensys legal representative Bill Hughes affirmed that this situation was regarded as “uncomplicated,” considering the specific characteristics of the Fuse token, it was observed.
“The take away 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,”
Hughes said.
Crypto Founders Commend the SEC’s New Leadership
Subsequent to a period during which numerous US crypto founders, firms, and ventures stated they felt antagonism from the SEC under former chair Gary Gensler, the most recent contact with Fuse suggests the agency’s methodology has been significantly altered, it was observed.
Within the identical month that Double Zero procured its no-action correspondence, a comparable no-action letter was also distributed by the SEC for crypto-custodians that were not qualified as banking institutions.
Despite the requirement that stringent prerequisites must still be satisfied, the no-action correspondence furnishes unambiguous directives on permissible methods for these entities to function and engage with digital assets. This necessary guidance has been repeatedly requested by the sector over the preceding few years.
