SEC Sends Strong Signal to Blockchain Founders With Token Ruling

SEC shakes up crypto rules with DoubleZero token ruling

The Securities and Exchange Commission (SEC) has taken an unprecedented step by publishing a letter that exempts DoubleZero’s 2Z token from enforcement under securities laws. For the first time, the regulator has officially acknowledged that not all cryptocurrency tokens fall under its jurisdiction.

Source: SEC

On September 29, Michael Seaman, General Counsel of the SEC’s Division of Corporate Finance, announced he would not recommend prosecuting DoubleZero’s 2Z token.

When a token isn’t a security

DoubleZero is building a decentralized network that lets blockchain systems lease unused private fiber-optic lines from their owners. Imagine having a high-speed internet connection that sits idle most of the time. Instead of wasting it, owners can lease bandwidth through a blockchain protocol.

How the DoubleZero network works.

Participants are rewarded with 2Z tokens for providing infrastructure such as cables, servers, and computing power. Seaman noted that this token distribution model does not require registration under US securities laws.

“This is more than a milestone for DoubleZero — it’s proof that U.S. founders and innovators can work with regulators to achieve clarity, and still move fast,” said Austin Federa, founder of DoubleZero and former head of strategy at the Solana Foundation.

Why the decision matters

SEC Commissioner Hester Peirce emphasized: “Congress created the Securities and Exchange Commission to oversee the securities markets, not to regulate all economic activity.”

She added that the agency’s position allows cryptocurrency projects to “spend their time deep in the weeds of building out infrastructure, not knee-deep in parsing the nuances of securities laws.”

Peirce explained the difference: tokens like 2Z are issued as payment for services—such as providing communication channels, computing power, or data storage—not as investments with the expectation of profit from others’ efforts.

“Treating such tokens as securities will stifle the growth of distributed service provider networks,” she warned. In her view, blockchain cannot achieve its full potential if regulators attempt to force new business models into frameworks designed for traditional financial markets.