The SEC just issued its second “no-action letter” against a decentralized physical infrastructure network (DePIN) crypto project in recent months, granting its native token “regulatory protection” from enforcement.
The ban letter was sent to the Solana DePIN project Fuse, which issues a network token FUSE as a reward for many who actively maintain the network and will not be sold to the general public.
Fuse initially submitted a letter to the SEC's Division of Corporate Finance on November nineteenth, requesting official confirmation that it could “not recommend that the SEC take enforcement motion” if the project continued to supply and sell FUSE tokens.
Fuse also noted in its letter that FUSE is designed for networking and consumption purposes, not speculation. It can only be redeemed through third parties at a mean market price.
“Based on the facts presented, the Department is not going to recommend any enforcement motion to the Commission if Fuse, counting on your opinion as counsel, offers and sells the tokens in the way and under the circumstances described in your letter,” Jonathan Ingram, deputy general counsel for the Division of Corporation Finance, wrote Monday.
SEC Letter of Inaction to Fuse Crypto. Source: SEC
The SEC's latest prohibition letter comes just months after the SEC issued an analogous “highly sought” letter to Double Zero, which was seen because of this of recent, more crypto-friendly leadership on the SEC.
At the time, DoubleZero co-founder Austin Federa said such letters were common in TradFi but “very rare” within the crypto space.
“It was a months-long process, but we found the SEC to be very receptive, we found them pretty skilled, pretty hard-working, there was no crypto hostility.”
The SEC was placed under recent leadership in April after Paul Atkins was sworn in as its thirty fourth chairman, and since then it has develop into apparent that the agency is taking a more balanced approach to cryptocurrencies. As a part of the leadership, crypto-friendly Hester Peirce also heads the agency's crypto task force.
No-action letters from the SEC are a type of regulatory clarity
Rebecca Rettig, legal representative of Solana MEV infrastructure platform Jito Labs, added to the discussion
“Why Do Crypto Teams Want It? 'Regulatory Clarity'.” If you intend to issue a token, a NAL provides reasonable assurance that you’re going to not face immediate prosecution for violations of securities laws. It is a sort of 'regulatory protection,'” she wrote.
It was not unexpected that the SEC gave Fuse a pass: crypto lawyer
However, the no-action letter doesn’t necessarily set recent precedents.
Consensys attorney Bill Hughes weighed in on the matter via X on Monday, saying it was “a straightforward case” given the character of the Fuse token.
“The takeaway is that there will not be a lawyer within the crypto space who would have thought that this token was a security. And perhaps not even any lawyer who is simply acquainted with Howey,” Hughes said.
Crypto founders praise the SEC's recent leadership
After an era by which many US crypto founders, corporations and projects said they felt the SEC's hostility under former chairman Gary Gensler, the newest interaction with Fuse shows that the agency has dramatically modified its approach.
The same month that Double Zero received its “no-action letter,” the SEC also issued an analogous “no-action letter” for crypto custodians that will not be considered banks.
Although they still have to fulfill strict conditions, the no-action letter provides clear guidelines on acceptable methods for all these corporations to operate and cope with crypto, something the industry has been begging for lately.
