In recent months, the SEC has just issued its second “no action letter” against the Decentralized Physical Infrastructure Network (DePIN) crypto project, giving its native token “regulatory protection” from enforcement.
A no-action letter was sent to the Solana DePIN Fuse project, which issues the FUSE network token as a reward for those actively maintaining the network.
First the fuse sophisticated On November 19, it sent a letter to the SEC’s Division of Corporate Finance seeking official confirmation that it would not recommend “sec enforcement action” if FUSE tokens continue to be traded on third-party trading platforms.
Fuse also emphasized in its letter that FUSE was designed with network usability and consumption purposes in mind, and not for speculative purposes. It can only be redeemed at mid-market price through third parties.
“Based on the facts presented, the Division will not recommend that the Commission take enforcement action if, based on your judgment as an attorney, Fuse offers and sells the Tokens in the manner and on the terms described in your letter.” he wrote On Monday, Corporation Finance deputy general counsel Jonathan Ingram.
The SEC’s latest no-action letter comes just months after the SEC issued a similar “very welcome” letter to Double Zero that was seen as a result of recent, more cryptocurrency-friendly leadership at the SEC.
During this time, DoubleZero co-founder Austin Federa he said such letters are common in TradFi, but are “very rare” in the crypto space.
“It was a multi-month process, but we found the SEC to be quite open, we found it to be quite professional, quite conscientious, there was no aversion to cryptocurrencies.”
The SEC took on recent leadership in April after Paul Atkins was sworn in as its 34th chairman, and since then the agency has been taking a more balanced approach to cryptocurrencies. As part of the leadership team, crypto-friendly Hester Peirce also heads the agency’s crypto task force.
SEC no-action letters are a form of regulatory transparency
Adding to discussion at
“Why do crypto teams want them? “Regulatory transparency.” If you plan to issue a token, NAL provides reasonable assurance that you will not face immediate enforcement for violating securities laws. It’s a kind of “regulatory shield,” she wrote.
The SEC giving Fuse a pass wasn’t unexpected: Crypto Lawyer
However, a no-action letter does not necessarily set recent precedents.
Commenting on the issue Monday via X, Consensys attorney Bill Hughes he said this was an “easy case” given the nature of the Fuse token.
“The problem is that there is no cryptocurrency lawyer who would think that this token is a security. Or maybe there is not even a lawyer who just knows Howey,” Hughes said.
Crypto founders praise recent SEC leadership
After an era in which many US cryptocurrency founders, companies and projects said they felt hostility from the SEC under former Chairman Gary Gensler, the latest interaction with Fuse indicates that the agency has radically changed its approach.
Related: The SEC will host a roundtable on privacy and financial oversight in December
In the same month that Double Zero received a no-action letter, the SEC also received a no-action letter released a similar no-action letter for cryptocurrency custodians that do not qualify as banks.
While they still must meet strict conditions, the no-action letter provides clear guidance on acceptable ways for these types of companies to operate and deal with cryptocurrencies, something the industry has been begging for over the past few years.
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