On September 29, 2025, the U.S. Securities and Exchange Commission (SEC) issued a rare no-action letter regarding DoubleZero, a project building decentralized physical infrastructure. The SEC's Division of Corporation Finance stated that it "will not recommend enforcement action” against DoubleZero's planned $2Z token, which rewards network participants who provide bandwidth to the network.

While narrow in scope, this decision marks the first time the SEC has formally acknowledged that tokens used to coordinate DePIN (Decentralized Physical Infrastructure Networks) can fall outside the scope of U.S. securities laws. For the broader crypto ecosystem, and especially for infrastructure-focused networks like IoTeX, this represents a breakthrough moment for regulatory clarity and innovation.

4 Key Takeaways from the DoubleZero No-Action Letter

1. Enforcement decision, not a binding legal ruling

The SEC's letter does not constitute a binding court decision or new regulation. It is a staff-level assurance that, based on the facts represented by DoubleZero, they will not recommend enforcement under Sections 5 or 12(g) for 2Z's token arrangements.

It remains conditional: if facts change, the SEC reserves the right to change its stance.

2. Programmatic transfers and functional incentives

DoubleZero's counsel argued, and the staff accepted for now, that 2Z's token flows are "programmatic transfers” embedded into network logic, not sales or securities offerings. The tokens serve as rewards or compensation for participants who provide infrastructure (bandwidth, connectivity, or computational support) rather than as investments in expectation of profit derived from others' efforts.

The SEC staff thus concluded that those token flows need not be registered under Section 5, and that 2Z need not register as a class of equity securities under Section 12(g).

3. Distinguishing DePIN from conventional fundraising

A central pillar of the letter is that DePIN token models differ in economic reality from classical capital-raising instruments. The SEC (via Commissioner Hester Peirce's public statement) emphasized that DePIN tokens are not shares of a company, nor promises of profits from the managerial efforts of others — arguably a core pivot under the Howey Test.

The staff letter specifically underscores that the way tokens are distributed (to network participants, according to protocol rules, not in sales driven by marketing or speculative demand) means that Howey's "expectation of profit from efforts of others” prong is not met under these facts.

4. Regulatory tone shift

The letter signals more than just a one-off outcome. Commissioner Peirce frames it as emblematic of a regulatory philosophy: the SEC is meant to guard securities markets, not to regulate all economic activity.

She argues that forcing DePIN tokens under securities-style frameworks would stifle distributed infrastructure innovation. Many analysts see this as part of a broader softening in SEC posture toward crypto projects.

Why This Is a Big Deal for the DePIN Sector

The SEC's no-action letter transforms DePIN's regulatory risk profile in several ways:

Reducing legal ambiguity

One of the biggest blockers for crypto projects has been uncertainty: will the SEC view your token as a security? This letter gives a data point (a safe harbor, of sorts) showing one token structure being accepted (for now). That clarity encourages design decisions aligned with utility and service rather than financial speculation.

Creating a blueprint for token economics

Other DePIN projects can now study DoubleZero's model: reward-based, programmatic distribution, clear separation from speculative sales. Token models that mimic or depart from this blueprint may have a better sense of how the SEC might view them.

Encouraging U.S.-based leadership

Because regulatory risk has historically pushed many DePIN projects offshore, having a viable path within U.S. jurisdiction is strategically valuable. The no-action letter may embolden more projects to build or maintain their presence in the U.S.

Reinforcing functional over speculative utility

By affirming that tokens tied to infrastructure work and network contribution can fall outside securities classification, the SEC is more clearly drawing a line between speculative "investment tokens” and functional "utility/incentive tokens.” That distinction helps projects anchor their narratives and tokenomics around real-world value.

Complementing other developments

The no-action letter arrives as Congress advances pro-innovation legislation, including the Clarity for Digital Tokens Act, the FIT21 Act, and the Clarity for Payment Stablecoins Act.

These bills aim to define regulatory categories, reduce SEC–CFTC overlap, and ensure builders can launch transparent, compliant networks without crippling legal risk.

The SEC’s acknowledgment of DePIN’s unique structure fits neatly into this evolving policy landscape — marking a broader alignment between regulators and legislators on how to treat real-world blockchain utility.

What This Means for IoTeX: Validation of a Vision

For IoTeX, positioned at the intersection of DePIN, AI, and real-world data, this development validates years of forward-thinking architecture.

Proven Alignment with the SEC’s Framework

IoTeX's tokenomics already reflect the principles now recognized by the SEC: tokens are distributed programmatically to reward verifiable contributions from devices, nodes, and infrastructure providers — not speculative investment.

Reinforced Confidence for Partners and Policymakers

Enterprise partners, developers, and regulators can now see DePIN's structure as compliant, productive, and socially valuable.
That's critical for IoTeX's mission to connect 40M+ devices and scale the Real-World AI economy.

Leadership in Responsible Token Design

As the leader of the Real-World AI Foundry, IoTeX is helping define best practices for responsible token design and governance — the same issues now at the forefront of regulatory discussion.

Conclusion: IoTeX and the Future of Regulated Innovation

The SEC's no-action letter for DoubleZero legitimizes a new era of crypto: one built on real infrastructure, verified data, and distributed participation.For IoTeX, this milestone aligns perfectly with our mission — to make the real world machine-readable, powering an open economy where devices, people, and AI collaborate securely through trusted data and incentives.

By combining regulatory clarity with technological integrity, IoTeX and the DePIN ecosystem can now scale with confidence — not in the shadows of uncertainty, but in the light of recognition.

About IoTeX

IoTeX is the blockchain platform for Real-World AI. Since 2017, its foundational infrastructure has delivered verified, real-time data from the real world to AI systems and decentralized applications. Powering 100+ projects and 40M devices across mobility, robotics, energy, health, and more, IoTeX enables developers to build next-gen AI models and applications that deliver real-world impact. The IoTeX tech stack provides the data, identity, and verification layers to fulfill the surging demand for real-world data in the new AI era. Trusted by partners like Google, Samsung, IEEE, ARM, and Nordic Semiconductor, IoTeX is uniquely positioned to capture the multi-trillion-dollar AI and data economy.

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