The SEC no-action letter has recently been granted to the Solana DePIN project, marking a significant milestone in the regulatory landscape for decentralized physical infrastructure networks. The letter provides regulatory clarity for the project’s native token, FUSE, shielding it from potential enforcement actions by the SEC.
In a move that surprised many, the SEC issued only its second no-action letter in recent months to a crypto project. The recipient, Solana DePIN project, utilizes the FUSE token as a reward mechanism for individuals actively maintaining the network. Notably, these tokens are not publicly sold, aligning with the SEC’s guidelines for regulatory compliance.
Understanding the SEC No-Action Letter
The no-action letter signifies that the SEC will not recommend enforcement action if the Solana DePIN project continues its operations as described. This comes after Fuse submitted a detailed request to the SEC’s Division of Corporation Finance, emphasizing that the FUSE token is designed for network utility rather than speculative investment.
Jonathan Ingram, deputy chief counsel of the Division of Corporation Finance, stated that based on the facts presented, the Division would not recommend enforcement action under the circumstances outlined by Fuse. This decision illustrates the SEC’s evolving approach to cryptocurrency regulations, particularly under its new leadership.
Why the No-Action Letter Matters
The issuance of a SEC no-action letter is highly coveted in the crypto space, as it offers a degree of regulatory certainty. As Rebecca Rettig from Jito Labs pointed out, such letters are crucial for crypto teams seeking assurance that they won’t face immediate enforcement for securities law violations. It provides a form of ‘regulatory cover’ that is invaluable for projects planning to issue tokens.
Bill Hughes, a lawyer at Consensys, commented that the FUSE token case was straightforward, and it was unlikely any knowledgeable lawyer would consider the token a security. His remarks highlight the growing understanding and acceptance of crypto projects within the legal framework.
SEC’s New Leadership and Its Impact
The SEC’s decision to issue the no-action letter to the Solana DePIN project reflects its new, balanced approach towards cryptocurrencies. Since the appointment of Paul Atkins as chairman, the agency has been seen as more receptive to crypto innovations. Hester Peirce, known for her crypto-friendly stance, also plays a pivotal role in this shift as head of the SEC’s crypto task force.
Under this new leadership, the SEC has not only provided the no-action letter to the Solana DePIN project but also to other crypto initiatives like Double Zero. These actions suggest a departure from the previous era of regulatory hostility faced by many U.S. crypto founders and projects.
The SEC no-action letters, while not setting new precedents, offer clearer guidelines for crypto-custodians and other entities operating in the crypto space. This development has been long-awaited by the industry, which has been advocating for more explicit regulatory frameworks to foster growth and innovation.
