SEC Provides No-Action Relief to Solana's Fuse, Ensuring Regulatory Safety for FUSE Token

SEC Grants No-Action Relief to Solana-Based Fuse, Offering Regulatory Protection for FUSE Token

The U.S. Securities and Exchange Commission (SEC) has issued a no-action letter to the decentralized physical infrastructure network (DePIN) project, Fuse, which operates on the Solana blockchain. This provides notable regulatory protection for its FUSE token.

Key Takeaways:

The SEC's no-action letter confirms it will not recommend enforcement action regarding the sale of the FUSE token as outlined in Fuse's request.
Fuse is the second DePIN project to receive such relief from the SEC in recent months.
Experts suggest that the SEC’s new leadership is fostering a more supportive environment for token regulation.

On November 19, Fuse submitted its request to the SEC's Division of Corporation Finance, seeking a commitment that the agency would not recommend any enforcement actions if it proceeded with the sale of FUSE tokens.

The Fuse project highlights that its token is specifically designed for participation in the network rather than speculative trading. It serves as a reward for users who help maintain the distributed infrastructure of Fuse. FUSE tokens can only be redeemed through third-party platforms at prevailing market prices.

SEC Will Not Pursue Action Against Fuse Token Sales

In a letter dated Monday and signed by Deputy Chief Counsel Jonathan Ingram, the SEC agreed to Fuse's terms.

“Based on the facts presented, the Division will not recommend enforcement action… if Fuse offers and sells the Tokens in the manner and under the circumstances described,” Ingram stated.

This marks the second time in a few months that the SEC has provided no-action relief to a DePIN project.

In August, a similar letter was issued to Double Zero, surprising many within the industry and sparking optimism that the SEC, now under the leadership of Chair Paul Atkins, is adopting a more balanced approach following years of tensions during the tenure of former chair Gary Gensler.

Austin Federa, co-founder of DoubleZero, described the SEC’s review process as “professional, diligent, and free of crypto animosity,” referring to the approval as “highly coveted.”

While no-action letters are commonplace in traditional finance, they are quite rare in the cryptocurrency space, making these consecutive approvals noteworthy.

The recent leadership changes at the SEC brought Commissioner Hester Peirce, known for her pro-innovation stance, to the forefront of the agency’s crypto task force.

Since this shift, many founders have expressed that the SEC is returning to a practical approach to rulemaking rather than aggressive enforcement tactics.

The Significance of No-Action Letters

Legal analysts view Fuse’s approval as a relatively straightforward case. Bill Hughes, a lawyer at Consensys, noted that "not a single lawyer in crypto" would consider FUSE a security due to its intended use and utility.

Rebecca Rettig, an attorney within the Solana ecosystem, explained that crypto projects seek no-action letters to gain “regulatory clarity,” providing a reasonable assurance that launching a token will not prompt immediate SEC scrutiny. “It serves as a kind of regulatory cover,” she stated.

Though this document does not set a new legal precedent, it highlights a significant shift in the regulatory landscape.

Recently, the SEC has also granted no-action relief to certain crypto custodians that lack banking charters, another area previously stalled under earlier leadership.

Simultaneously, Atkins is contemplating the introduction of a “token taxonomy” at the federal level to better clarify how specific crypto assets should be classified.

Earlier this month, Atkins announced he is considering a token taxonomy "anchored in the longstanding Howey investment contract securities analysis," as the next phase of the SEC's “Project Crypto” initiative.