SEC’s DoubleZero No-Action Letter: What It Means for Crypto Law
On September 29 2025, the SEC’s Division of Corporation Finance issued no-action relief to the DoubleZero Foundation, clearing its planned token distributions from the registration requirements of Section 5 of the Securities Act and Section 12(g) of the Exchange Act.
This puts DoubleZero alongside projects such as TurnKey Jet, Pocketful of Quarters, and IMVU, a small group that has received similar relief for token distributions with clear, functional use cases.
What DoubleZero Is
DoubleZero is a Cayman Islands foundation supporting a Decentralized Physical Infrastructure Network, or DePIN.
Its protocol links underused private fiber lines into a shared, high-speed mesh network. Participants who contribute bandwidth or maintain the network earn 2Z tokens as payment, and users spend 2Z to access the faster connection.
These programmatic transfers of 2Z compensate active network contributors, not passive investors.
Why the SEC Granted Relief
DoubleZero argued, and the SEC staff accepted, that the Howey Test was not met.
Under Howey, a security requires, among other things, a reasonable expectation of profits from the efforts of others.
Here, any reward depends on the participant’s own technical and operational work: running nodes, maintaining fiber, validating data, or computing payments.
Because success turns on the efforts of network participants, not on a central promoter, the “efforts of others” prong of Howey fails.
Commissioner Peirce’s Perspective
Commissioner Hester Peirce called the letter a model for how regulators can foster innovation without expanding their mandate.
She emphasized that tokens like 2Z are functional incentives for building decentralized infrastructure, not investment contracts.
In her words, projects such as DoubleZero should be “deep in the weeds of building infrastructure, not knee-deep in securities law.”
Closing
The DoubleZero no-action letter signals that when token rewards truly compensate work, and not investment, economic reality matters.
It’s a cautious but important step toward clearer treatment of DePIN and utility tokens in U.S. securities regulation.
Sources
https://www.sec.gov/files/corpfin/no-action/doublezero-final-conformed-092625.pdf
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