The Securities and Exchange Commission’s Division of Corporation Finance issued a no-action letter regarding DoubleZero’s token distributions, marking a significant moment for decentralized physical infrastructure networks (DePIN). In her accompanying statement, Commissioner Hester M. Peirce emphasized the importance of regulatory restraint and the need to align oversight with Congress’s intended mandate.

Understanding DePIN: Infrastructure Beyond Centralization

DePIN projects represent a new model for organizing resources and human participation. Instead of building infrastructure through a single corporate entity, these projects coordinate individuals and organizations to contribute real-world capabilities such as:

• Telecommunications bandwidth

• Energy provision

• Decentralized mapping

• Data storage

Participants provide services directly to the network and receive tokens as rewards. Unlike equity or debt securities, these tokens function as programmatic incentives, they encourage infrastructure buildout rather than offering a stake in corporate profits.

Commissioner Peirce underlined this distinction: DePIN tokens are not stock, nor contractual rights to future earnings. They are, instead, functional assets designed to support distributed networks.

Why the Howey Test Does Not Apply

The Commissioner’s statement highlighted how DePIN projects diverge from traditional capital-raising activities typically scrutinized under the Howey Test. Key differences include:

• Compensation vs. investment: Tokens are earned through work performed or services provided (running nodes, supplying storage, contributing bandwidth), not through passive investment.
  
  

• No capital-raising intent: Projects are not distributing tokens to attract outside investors seeking profit, but rather to reward active network participants.
  
  

• Programmatic distribution: Tokens are released automatically according to network rules, not discretionary managerial decisions.

Given these characteristics, the economic reality of DePIN tokens does not satisfy Howey. Treating them as securities, Peirce argued, would risk stifling the growth of peer-to-peer infrastructure systems.

Regulatory Role: Precision, Not Expansion

Commissioner Peirce reiterated that the SEC’s authority stems from Congress, and that its jurisdiction lies in regulating securities markets, not all economic activity. Attempting to fit DePIN tokens into securities law would, in her view, misapply statutory intent and hinder technological progress.

Instead, she urged regulators to:

• Engage with innovators in good faith
  
  

• Listen carefully to how new models operate
  
  

• Apply statutory mandates with thoughtful precision

The DoubleZero no-action letter, she argued, shows how this approach allows builders to focus on creating infrastructure rather than navigating ambiguous regulatory hurdles.

Why This Matters

The statement reflects broader debates about the role of blockchain technology in society and the limits of securities law. Key implications include:

• For innovators: DePIN projects gain regulatory breathing room to expand networks without fear that functional tokens will be recast as securities.
  
  

• For markets: Success will be determined by adoption, efficiency, and real-world utility—not compliance with frameworks never designed for such systems.
  
  

• For regulators: The decision sets an important precedent in drawing boundaries around the SEC’s role and resisting jurisdictional overreach.

Commissioner Peirce’s words signal an openness to innovation while affirming that markets not regulators should ultimately decide the viability of decentralized 

Conclusion

The DoubleZero no-action letter demonstrates how regulators can balance statutory fidelity with technological evolution. By distinguishing between investment contracts and functional incentives, the SEC acknowledges that not every token needs to fit inside the securities law framework.

As Commissioner Peirce put it, the SEC should allow innovators to remain “deep in the weeds of building out infrastructure, not knee-deep in parsing the nuances of securities laws.”

For the full text of Commissioner Peirce’s statement, see: 

SEC Statement on DoubleZero No-Action Letter.

No Action Letter