SEC's FUSE Ruling Paves Regulatory Road for DePIN Innovation

The U.S. Securities and Exchange Commission (SEC) has granted a rare no-action letter to Fuse Crypto Limited, the company behind the FUSE token, marking a significant regulatory milestone for decentralized physical infrastructure networks (DePIN) projects. The decision, announced on November 24, 2025, confirms that the token will not be classified as a security under U.S. securities laws, provided it is offered and sold under the conditions outlined in the letter. This move follows a similar no-action letter issued in September to DoubleZero's 2Z token, signaling a shift in the SEC's approach toward utility-driven crypto projects.

The no-action letter, issued by the SEC's Division of Corporation Finance, states that the agency will not recommend enforcement action if Fuse offers and sells its FUSE token as described. The determination hinges on the token's utility within a decentralized energy grid, where users earn rewards for participating in sustainability initiatives like rooftop solar installations, electric vehicle charging, and energy efficiency programs. The SEC concluded that FUSE does not meet the criteria of an investment contract under the 1946 Howey test, which defines a security as an investment of money in a common enterprise with profits derived from the efforts of others. Instead, the token's value is tied to its use within the network, incentivizing energy-conscious behavior rather than speculative gains.

The decision provides much-needed regulatory clarity for the DePIN sector, which has faced uncertainty under the SEC's enforcement priorities under former Chair Gary Gensler. The no-action letter aligns with the agency's recent pivot under new leadership, including Chair Paul Atkins and Commissioner Hester Peirce, who have advocated for a more nuanced approach to crypto regulation. "The take away is that there is not a lawyer in crypto that would have thought this token was a security," said Consensys lawyer Bill Hughes, noting the SEC's balanced evaluation. The agency has also hinted at developing a "token taxonomy" to differentiate between securities and utility tokens, a framework that could streamline future regulatory decisions.

The ruling has broader implications for the crypto industry, particularly as the Clarity Act-a proposed federal bill to standardize crypto regulations-remains stalled. By granting no-action relief, the SEC offers a temporary but significant endorsement of DePIN projects, encouraging innovation in green energy and decentralized infrastructure. Fuse's success could pave the way for similar projects seeking to leverage blockchain for real-world applications, from carbon credit tracking to renewable energy distribution.

Critics, however, caution that the decision is narrowly tailored to Fuse's specific use case and does not set a broad precedent. The SEC explicitly stated that the no-action letter applies only to the facts presented and does not preclude future enforcement if circumstances change. Nonetheless, the ruling represents a pragmatic step toward harmonizing crypto innovation with consumer protection, a balance that industry advocates have long sought.

Sources:

SEC says FUSE token isn't a security in new no-action letter https://www.cryptopolitan.com/sec-says-fuse-token-isnt-a-security/

SEC Issues No-Action Letter to Fuse Crypto Ltd for Its Token https://www.cryptonewsz.com/sec-no-action-letter-fuse-crypto-ltd-token/

U.S. SEC Issues a No-action Letter to Fuse Crypto Amid Stalling Clarity Act https://coinpedia.org/news/u-s-sec-issues-a-no-action-letter-to-fuse-crypto-amid-stalling-clarity-act/

SEC issues 'rare' no-action letter for Solana DePIN project token FUSE https://cointelegraph.com/news/sec-no-action-letter-fuse-depin-project