A crypto startup, DoubleZero, has received a rare “no-action” letter from the U.S. Securities and Exchange Commission, affirming that its 2Z token is not a security.
This is a breakthrough for the company, representing a more favorable approach by regulators to utility-based digital assets.
SEC decision boosts confidence in crypto projects
The consent confirms that the Division of Corporation Finance of the SEC has reviewed the token distribution model of DoubleZero and decided not to advise that action be taken. Analysts believe that the ruling gives confidence to the industry because it demonstrates that tokens that have simple utility can be organized legally.
The threat of having their assets treated as securities has been a source of uncertainty to crypto firms over the years. The action by the SEC brings clarity and underscores the fact that the agency acknowledges the existence of tokens intended for use, but not for speculation.
DoubleZero aims to expand blockchain communication
The network that DoubleZero is constructing is a global network that leverages unused subsea and terrestrial fiber optic cables. It operates this system on its 2Z token, which provides participants access to bandwidth and staking rewards. The company stated that it uses its token in its actual use and not as a speculative investment.
The project is also efficiency- and utility-based, which distinguishes it among those ventures that only aim at short-term profits. The SEC’s acceptance alone indicates that it is eager to incorporate real-world use cases into the blockchain ecosystem.
Regulatory shift aligns with past and future rulings
This ruling follows the Ripple case, in which a federal court held that only sales of XRP to large investors constituted securities, not those to retail investors. Through that decision, it was determined that tokens are not necessarily securities; however, they must be evaluated on a case-by-case basis.
The principle is extended by DoubleZero, one of the rare instances where the SEC acknowledged the utility of tokens even prior to the project’s launch. The relocation is an indicator of a bigger attempt to create distinctions between imaginative assets and utilitarian digital devices.
Meanwhile, the SEC has lifted all of the delay notices on several crypto exchange-traded funds. This consists of ETFs that are pegged to Solana, XRP, Hedera, Litecoin, and Cardano. Companies like Bitwise, VanEck, Fidelity, WisdomTree, and Invesco Galaxy can now proceed without the delays they were experiencing.
New generic listing standards for crypto ETFs were recently approved by the agency, taking effect on October 1. These standards provide clear guidance to exchanges and fund managers, facilitating a smoother approval process. Doing away with delay notices signals that regulators are willing to allow more than one fund to be operating at a time, which would result in a less uncertain market.
Such regulatory advancement is a sign of transitioning to more transparent regulations for online assets. It offers startups and institutional players a better foundation on which to operate and innovate in the evolving cryptocurrency environment.
