Kiln’s Post

The SEC just issued a no-action letter for programmatic token distribution. But it’s more than a waiver — it’s a signpost highlighting regulators’ role in crypto innovation focused on a decentralized physical infrastructure network (DePIN). Key points: 🌐 The letter addresses DoubleZero’s token distribution to infrastructure participants (e.g. nodes, bandwidth, storage), not to passive investors. 🌐 It draws a sharp distinction: these tokens function as incentives/performance rewards rather than securities under the notorious Howey test. 🌐 Commissioner Peirce argues that over-aggressive application of securities law to DePIN models would “suppress the growth of networks of distributed providers.” 🌐 She frames the SEC’s role as listening and applying its mandate “thoughtfully and with precision,” letting builders build rather than regulators define every move. 📌 Takeaways: 🔹 Design for use, not speculation. If your token mechanism primarily rewards active infrastructure participation (not passive holding), your model stands a better chance of escaping SEC’s squeeze. 🔹 Seeking clarity early can pay off.  The no-action letter path remains narrow, but engaging the SEC or adopting conservative design features is smart risk management. 🔹 Watch the move to differentiation. Federal regulators are signaling that not everything crypto = securities — but you’ll only get that benefit if your model clearly avoids the hallmarks of investment contracts. What do you think: does this no-action letter open a new strategic frontier for DePIN builders?

The SEC staff just issued no-action relief to DoubleZero Foundation tl;dr: paying network participants with 2Z tokens programmatically won’t trigger registration This is similar to the view I took when the prior U.S. Securities and Exchange Commission regime did Helium dirty on that last minute action in January (https://flor.io/helium). DoubleZero is a DePIN (decentralized physical infrastructure network) protocol for private fiber connections. A Cayman foundation supports it, but doesn’t operate the links (pretty crypto standard) and 2Z is the native token. The ask was simple: can we compensate providers programmatically without treating it like a securities offering? The design is key. There are two payment flows: – Network Providers earn 2Z when they deliver bandwidth – Resource Providers earn 2Z for calculating those payouts Both transfers run automatically by code. There's no discretion and no “managerial efforts” (a classic Howey test phrase) by the foundation. The foundation does what many protocol foundations do: it educates, funds audits, help source network participants, but doesn't run the infrastructure. The SEC agreed that Howey's “efforts of others” prong (more Howey test) didn’t fit here. Earnings are from a provider’s work not from the foundation's managerial activity. This is largely because the tokens are being provided as in-kind payment for services rendered (yes I know, securities are used this way too, but using them in this way didn't make them securities, they were already securities). There's an important pattern forming with the guidance the SEC since the regime change: We're not getting any modification to existing rules or regs, instead we continue see find what the SEC sees as the outer bound of their jurisdiction (a point I also made on a Law of Code episode with Jacob Robinson a few months ago) Expect this pattern to continue via statements and no-action letters. Sources tell me that any rule modifications are going to come through the more formal (and much slower) rulemaking process, which also includes public comment periods. Stay tuned, there is definitely more fun to come! Today is the last day of the SEC's fiscal year and historically we get a flurry of activity around now.

On September 29, 2025, the SEC issued a notable No-Action Letter granting relief from the application of the federal securities laws to certain crypto token distributions designed to support the programmatic functioning of a decentralized physical infrastructure network (“DePIN”).   In a separate statement, Commissioner Hester M. Pierce further distinguished DePIN projects from securities, emphasizing that, in her view, the Howey Test is not satisfied. She explained that these projects allocate tokens as compensation for work performed on the network, rather than as investments made with an expectation of profit derived from the efforts of others. She also noted that tokens are distributed to users who actively participate in the network under its rules, rather than to passive investors primarily interested in financial returns. Commissioner Pierce underscored the importance of providing such relief to “help infrastructure providers spend their time deep in the weeds of building out infrastructure, not knee-deep in parsing the nuances of securities laws.”   Our Take: This development reflects the SEC’s evolving approach to digital assets and represents one of the first no-action letters to address DePIN token distributions specifically. It signals a willingness to recognize functional, utility-driven token models that fall outside the securities framework, and a broader effort to avoid forcing all blockchain-based innovations into existing securities regulations. Read the full the SEC press release: https://bit.ly/4nAumb5.

You may have heard about the recent GENIUS Act that regulates digital assets. But what does it mean? “The GENIUS Act creates a regulated category for payment stablecoins and spells out the safeguards—such as reserve requirements, transparency standards and compliance obligations—that issuers must meet,” said Clint Dishman, CFA, director of the Strategic Investment Advisors group at BOK Financial®. Dishman sat down for a Q&A to explain what it may mean for you and the future of stablecoins. https://ow.ly/pQAI50X13YF

You may have heard about the recent GENIUS Act that regulates digital assets. But what does it mean? “The GENIUS Act creates a regulated category for payment stablecoins and spells out the safeguards—such as reserve requirements, transparency standards and compliance obligations—that issuers must meet,” said Clint Dishman, CFA, director of the Strategic Investment Advisors group at BOK Financial®. Dishman sat down for a Q&A to explain what it may mean for you and the future of stablecoins. https://ow.ly/WWWW50X7oH9

You may have heard about the recent GENIUS Act that regulates digital assets. But what does it mean? “The GENIUS Act creates a regulated category for payment stablecoins and spells out the safeguards—such as reserve requirements, transparency standards and compliance obligations—that issuers must meet,” said Clint Dishman, CFA, director of the Strategic Investment Advisors group at BOK Financial®. Dishman sat down for a Q&A to explain what it may mean for you and the future of stablecoins. https://ow.ly/lpMV50X7Z1C

You may have heard about the recent GENIUS Act that regulates digital assets. But what does it mean? “The GENIUS Act creates a regulated category for payment stablecoins and spells out the safeguards—such as reserve requirements, transparency standards and compliance obligations—that issuers must meet,” said Clint Dishman, CFA, director of the Strategic Investment Advisors group at BOK Financial®. Dishman sat down for a Q&A to explain what it may mean for you and the future of stablecoins. https://ow.ly/Xj2I50X13XA

💡UK #cryptoasset regulation is entering a pivotal phase. With new legislation heading to Parliament and the Financial Conduct Authority drafting detailed rules, the regulatory landscape for #crypto businesses is being reshaped. Now is the time for firms to assess the likely impact on their operations and consider the steps needed to stay compliant. Read more in our latest article: https://lnkd.in/djiwQ6rH #fintech #FCA

💡UK #cryptoasset regulation is entering a pivotal phase. With new legislation heading to Parliament and the Financial Conduct Authority drafting detailed rules, the regulatory landscape for #crypto businesses is being reshaped. Now is the time for firms to assess the likely impact on their operations and consider the steps needed to stay compliant. Read more in our latest article: https://lnkd.in/djiwQ6rH #fintech #FCA