Key Takeaways 

What does this SEC greenlight mean for the DEPIN sector?

It could encourage contributions to DEPIN networks without concerns over regulatory risk.

How did the market respond?

The market size of the segment increased by 3% to $34B. 

The U.S. Securities and Exchange Commission (SEC) gave DEPIN (decentralized physical infrastructure networks) one of its clearest signals yet.

In a “no action” letter, the regulator said it will not “recommend enforcement action” against Double Zero’s 2Z token distribution. The agency added, 

“Programmatic transfers that are conducted in the manner and under the circumstances described in your letter are not registered under Section 5 of the Securities Act.”

Double Zero runs a low-latency DEPIN that leverages underutilized physical fiber to help blockchains overcome frictions in traditional networks.

In return, the firm plans to allocate its native token, 2Z, to participants who share their resources for the network.

DEPIN tokens bounce on clarity 

Reacting to the update, Commissioner Hester Peirce clarified that DEPIN tokens are not investment contracts but “incentives” to help build a network. 

Noting that the category sits outside the scope of securities law, she added, 

“Treating such tokens as securities would suppress the growth of networks of distributed providers of services.”

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Author: Benjamin Njiri