The Securities and Exchange Commission (SEC) has issued its second “no-action letter” to a decentralized physical infrastructure network (DePIN) crypto project in recent months. This move provides its native token with “regulatory cover” from enforcement actions.
The no-action letter was specifically sent to Solana DePIN project Fuse, which issues a network token known as FUSE. This token serves as a reward for individuals actively maintaining the network and is not offered for public sale.
Fuse initially submitted a letter to the SEC’s Division of Corporation Finance on November 19. The project sought official confirmation that the SEC would refrain from recommending enforcement action if Fuse continued to offer and sell FUSE tokens.
In its submission, Fuse also detailed that the FUSE token is designed for network utility and consumptive purposes, not for speculative trading. The token can only be redeemed for its average market price through third-party platforms.
Jonathan Ingram, deputy chief counsel for the Division of Corporation Finance, wrote in a letter on Monday, "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."
This latest no-action letter from the SEC follows a similar one issued a few months prior to Double Zero. This recent trend is being interpreted as a result of new, more crypto-friendly leadership within the SEC.
At the time of Double Zero's letter, co-founder Austin Federa commented that while such letters are common in traditional finance (TradFi), they are “very rare” in the cryptocurrency space. He further elaborated on the process:
"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."
The SEC welcomed new leadership in April with the swearing-in of Paul Atkins as its 34th chairman. Since then, the agency has been observed adopting a more balanced approach to the cryptocurrency sector. Notably, crypto advocate Hester Peirce also heads the agency’s crypto task force as part of this new leadership.
SEC No-Action Letters Provide Regulatory Clarity
Rebecca Rettig, a legal representative for Solana MEV infrastructure platform Jito Labs, noted on X that no-action letters (NALs) are highly sought after by numerous crypto projects. She explained the value of these letters:
“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.’”
Crypto Lawyer Views SEC's Decision on Fuse as Unsurprising
However, the no-action letter issued to Fuse does not necessarily establish new legal precedents.
Consensys lawyer Bill Hughes commented on X that this particular case was "an easy case," given the nature of Fuse's token. He stated:
“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.”
Crypto Founders Applaud SEC's New Leadership
Following an era where many U.S. crypto founders, businesses, and projects reported feeling a hostile stance from the SEC under former chair Gary Gensler, the recent interaction with Fuse suggests a significant shift in the agency's approach.
In the same month that Double Zero secured its no-action letter, the SEC also issued a similar letter for crypto custodians that do not qualify as banks.
While these firms must still adhere to strict conditions, the no-action letter provides clear guidelines for acceptable operational methods and crypto dealings. This clarity is something the industry has been advocating for over the past few years.