SEC Clears DoubleZero’s 2Z Token With DePIN No-Action Ruling

• SEC issues a no-action letter stating 2Z token is not a security under Howey.
• DePIN token model stands: programmatic transfers reward infrastructure work, not passive profit.
• The ruling offers legal clarity and may reshape utility token regulatory frameworks.

The U.S. Securities and Exchange Commission’s Division of Corporation Finance has made a clear determination on DoubleZero. In a no-action letter issued on September 30, the SEC stated that the DoubleZero 2Z token does not satisfy the Howey Test and will not be treated as a security. For the first time, a DePIN project has received formal recognition that its utility token can operate outside traditional securities law.

“Based on the facts presented, the Division will not recommend enforcement action to the Commission,” the no-action letter noted. For DoubleZero, this language marks not just a procedural outcome, but a regulatory milestone.

Related: SEC’s Paul Atkins Pushes ‘Innovation Exemption’ for Crypto Products and IPO Revival in 2025

Why the SEC Ruled 2Z Is Not a Security

In a statement after the no-action letter from the Division of Corporate Finance, SEC commissioner Hester Peirce stated that DoubleZero’s 2Z token is not a security due to several reasons including:

• Howey test not satisfied: Commissioner Peirce noted that the 2Z token is not used to fundraise for the DoubleZero project instead used to reward network participants, thus not satisfactory to the Howey test.

• Revamped regulatory framework from Congress: Commissioner Peirce noted that blockchain technology cannot reach its full potential if the SEC uses traditional securities laws on decentralized projects.

• 2Z is based on proof-of-utility in the DePIN sector: According to Peirce, the 2Z token is used to facilitate the decentralized physical infrastructure network (DePIN) via rewarding users and not raising funds.

“These projects allocate tokens as compensation for work performed or services rendered, rather than as investments with an expectation of profit from the entrepreneurial or managerial efforts of others,” Peirce noted.

How Does DoubleZero Ecosystem Benefit from the Ruling?

The SEC no-action letter offers DoubleZero several immediate advantages: 

• Investors’ confidence: The no-action letter will give investors confidence to engage as an infrastructure provider, validators, thus enhancing capital allocation.

• 2Z token listing: Following the SEC’s ruling, Binance Wallet announced that it will list 2Z tokens on Binance Alpha by October 2.

• Legal clarity: According to Austin Federa, co-founder of DoubleZero, the no-action letter has stamped the legal status of the 2Z token, and thus will play a crucial role in accelerating its global development.

A Relief to the Crypto Industry

The ruling also extends beyond DoubleZero. It provides the crypto industry with regulatory clarity that other DePIN crypto projects can look to when designing token models. Legal certainty has long been a missing piece for teams trying to avoid the gray zone of securities law. 

With the SEC explicitly acknowledging the utility-driven nature of 2Z, developers may feel empowered to build similar networks without defaulting to fundraising mechanics.

Related: SEC Moves Closer to Approving ETF Share Classes for Mutual Funds