On September 29, 2025, the SEC’s Division of Corporation Finance issued a no-action letter stating it would not recommend enforcement action with respect to certain offers and sales of the 2Z token, the native token of the DoubleZero Protocol. The no-action relief applies to “Programmatic Transfers” as more fully described below.[1]
DoubleZero Foundation’s request for no-action relief explains its intention to launch the DoubleZero Protocol and its native token, the 2Z token.[2] The request describes “[t]he DoubleZero protocol is a set of smart contracts that provide a framework for permissionlessly adding high-performance network connectivity, which others can pay for and use.” The Protocol enables a marketplace for fiber capacity, permitting “anyone to monetize underutilized lit fiber and dark fiber by linking them together to form a single mesh network for faster and more efficient communication (the “Network”).”[3] The goal of constructing the DoubleZero Protocol and Network is to reduce blockchain traffic congestion on public internet infrastructure by creating a purpose-built internet using existing, underutilized lit fiber and dark fiber installed by private entities.[4]
The letter further clarifies that several categories of participants operate the DoubleZero ecosystem without a central promoter or sponsor, including:
- Users who pay to transmit communications over the Network,
- Network Providers, who supply the fiber links and operate the hardware comprising the Network,
- Resource Providers, who calculate Network Provider fees, maintain the DoubleZero Ledger (as defined below) and otherwise facilitate the administration of the Network,
- the Foundation, which supports the decentralization and development of the Protocol and Network, and
- independent technology contributors
Analysis
The relief granted applies to two categories of “Programmatic Transfers” of 2Z tokens provided as compensation for services:
- Providers Payments – compensation to Network Providers, enterprises that connect underutilized lit fiber and dark fiber to the Network (e.g., technology firms and data center operators); and
- Computation Payments – compensation to Resource Providers, network participants that perform various maintenance and monitoring duties necessary to sustain the technical integrity and ongoing functionality of the Network, for calculating payments owed to certain network participants.[5]
The DoubleZero Foundation argued that the Programmatic Transfers would not satisfy the fourth prong of Howey because neither the Network Providers nor the Resource Providers had a reasonable expectation of profits based on the entrepreneurial or managerial efforts of a promoter or sponsor. Instead, Network Providers will receive payments for connecting to the network, which requires commitments of time, resources, technical expertise, and financial risk. In addition to these “setup efforts,” the payments to Network Providers depend on the incremental value they provide to the overall performance of the Network. Similarly, Resource Providers will receive compensation for monitoring, maintaining, and securing the network. The No-Action request helpfully drew comparisons between the functions of Resource Providers and miners that contribute hash power to proof-of-work networks. This activity, as clarified by the SEC, does not involve the offer and sale of securities under certain circumstances.[6]
The no-action request by DoubleZero emphasized that the Foundation’s marketing materials prioritized technical and educational explanations of the project while refraining from touting the tokens as an investment. As industry participants will recall, marketing materials touting the future development of a project, the sophistication of the team, and other characteristics that may be imputed to the rise in a token’s value, have been cited by the SEC as evidence that a reasonable purchaser would expect profits from the efforts of others.
In a statement accompanying the no-action letter, Commissioner Hester Peirce emphasized the economic realities of DePin projects, noting that they “allocate tokens as compensation for work performed or services rendered.” She further observed that such tokens are not distributed “to finance additional development from investors attracted solely by the prospect of investment returns.”
Conclusion
The issuance of the DePin no-action letter represents a meaningful step toward clarifying the SEC staff’s position on when certain offers and sales of digital tokens may fall outside the scope of the federal securities laws. The presence of a secondary market is not, in itself, determinative, and programmatic transfers, including those made as compensation for contributions to a network, may be permissible under certain circumstances.
Significantly, the staff’s no-action relief is limited to the 2Z tokens and the specific facts and circumstances presented in the DoubleZero Foundation’s request. Other prospective token issuers cannot rely on this relief. They must seek their own no-action determination or await further regulatory or legislative developments that provide greater clarity on the application of federal securities laws to token issuances.
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[1] Div. of Corp. Fin., U.S. Sec. & Exch. Comm’n, Response of the Division of Corporation Finance — DoubleZero (No-Action Letter) (Sept. 29, 2025), https://www.sec.gov/rules-regulations/no-action-interpretive-exemptive-letters/division-corporation-finance-no-action/doublezero-092925 (last visited Oct. 10, 2025).
[2] Id.
[3] Id.
[5] Id.
[6] SEC, Statement on Certain Proof-of-Work Mining Activities (2025), https://www.sec.gov/newsroom/speeches-statements/statement-certain-proof-work-mining-activities-032025.