In an unexpected yet pivotal move, the U.S. Securities and Exchange Commission (SEC) has granted DoubleZero, a decentralized infrastructure startup, a no-action letter, signaling a significant shift in the agency’s approach toward blockchain technologies. The decision has been hailed by crypto advocates, who see it as a step forward in clarifying the regulatory environment for decentralized projects.
A New Dawn for Decentralized Infrastructure
Hester Peirce, often dubbed “Crypto Mom” for her supportive stance on digital assets, has long been a proponent of creating a more accommodating space for blockchain initiatives. Her influence was evident in the SEC’s recent decision, which she believes paves the way for innovative projects like DoubleZero’s decentralized physical infrastructure network (DePIN). Peirce remarked that such initiatives can function without the traditional centralized corporate structures, instead relying on a distributed network of participants to provide essential services like storage and telecommunications.
The no-action letter issued to DoubleZero means the SEC won’t pursue registration complaints for the company’s token issuance, provided they adhere strictly to the guidelines set forth. This is a notable development because it delineates the boundaries of what the SEC considers being outside its jurisdiction, particularly in relation to the Howey Test, the benchmark for determining securities.
The Implications of a No-Action Letter
The SEC’s no-action letters are a critical tool for businesses navigating the often murky waters of crypto regulation. By granting one to DoubleZero, the SEC has essentially signaled to the broader industry that activities similar to those of DoubleZero might also be free from enforcement actions, provided they remain within specified parameters.
Austin Federa, co-founder of DoubleZero, expressed relief and optimism about the decision. “The line between tokens and securities law is getting clearer,” Federa noted, emphasizing that startups can now redirect their resources from legal battles to actual development. DoubleZero’s model incentivizes infrastructure providers, such as large tech companies with surplus fiber networks, by rewarding them with the protocol’s native token, 2Z.
A Boon for Blockchain’s Potential
Commissioner Peirce has argued that treating such tokens as securities would stifle growth within the blockchain sector. “Blockchain technology cannot reach its full potential if we force all activities into existing financial market regulatory frameworks,” she stated. Her comments underline a growing recognition that the unique nature of blockchain requires new regulatory approaches.
The move was met with enthusiasm from the decentralized finance (DeFi) community, with Amanda Tuminelli, executive director of the DeFi Education Fund, applauding the SEC’s pragmatic use of no-action letters. She highlighted the importance of engaging constructively with regulators to foster a more conducive environment for innovation.
SEC’s Pro-Crypto Stance Under Chairman Atkins
The SEC’s stance on cryptocurrencies has evolved significantly under Chairman Paul Atkins, who has prioritized establishing clear rules for the digital assets sector. At a recent roundtable event, Atkins reiterated that creating a coherent regulatory framework for digital assets is a top priority for the agency. This focus has been a continuance of the groundwork laid by Peirce, who led the agency’s crypto task force prior to Atkins’ arrival.
The SEC’s decision comes at a time when blockchain projects are increasingly scrutinized for their potential impact on traditional financial systems. By offering a clearer path forward for decentralized projects, the agency is acknowledging the transformative potential of blockchain technology while balancing the need for investor protection.
The Road Ahead for DoubleZero and Decentralized Networks
For DoubleZero, the SEC’s decision is more than just a regulatory green light; it’s an endorsement of their innovative approach to building decentralized infrastructure. The company’s vision of a “new internet” for blockchains, which has already garnered a $400 million valuation from top crypto venture capitalists, is now poised to proceed with greater confidence and clarity.
As the landscape for digital assets continues to evolve, the SEC’s actions will likely set precedents that influence future regulatory decisions. For now, the agency’s nod to DoubleZero represents a cautious but promising step towards embracing the potential of decentralized technologies.
In the broader context, the SEC’s decision may well encourage more projects to explore decentralized models, knowing that there’s a regulatory pathway that allows for innovation without the constant threat of enforcement actions. This could herald a new era of growth and creativity within the blockchain sector, as companies like DoubleZero lead the charge in redefining how digital infrastructure is built and managed.
As the crypto industry continues to mature, the dialogue between regulators and innovators remains crucial. The SEC’s no-action letter to DoubleZero could be the beginning of a more flexible, adaptive regulatory approach that not only protects investors but also nurtures the burgeoning field of decentralized finance and technology.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
