Author: Jae, PANews Another project in the crypto space has received the green light from the SEC (Securities and Exchange Commission). The SEC recently issued a No-Action Letter (NAL) to Fuse Crypto Limited (hereinafter referred to as Fuse) regarding its native token, Energy Dollar, formally confirming that under certain issuance and sale structures, the ENERGY token will not be considered a security. This development not only gives Fuse a compliance advantage, but also means that the DePIN (Decentralized Physical Infrastructure Network) track can more easily complete the compliance puzzle compared to other tracks. SEC approves Fuse to issue ENERGY tokens On November 24, the SEC issued a crucial NAL (Non-Allowed Decision) regarding Fuse's ENERGY token. This decision further demonstrates the SEC's systemic shift in regulatory attitude, especially towards blockchain projects aimed at solving real-world problems. Fuse Energy is a DePIN project focused on energy technology innovation. Its core business is an energy network operating on the Solana blockchain, which incentivizes home users to install and use DERs (distributed energy resources), such as rooftop solar panels, electric vehicle charging stations, and home energy storage batteries, through a reward system. Fuse aims to coordinate these decentralized resources, helping to deconstruct the power grid and manage load pressure, thereby alleviating grid congestion. NAL stated that as long as Fuse strictly adheres to the issuance and sale methods described in its filing on November 19, the SEC will not take enforcement action against it under Section 5 (Registration of Issuance) of the Securities Act of 1933 and Section 12(g) (Registration of Equity Securities) of the Exchange Act of 1934. The compliance exemption for the ENERGY token is not an isolated case. Multicoin Capital, heavily invested in the DePIN sector, led funding rounds of $12 million and $28 million for DePIN projects Fuse and DoubleZero, respectively. Coincidentally, Fuse's NAL is the second similar document issued by the SEC in a short period, following DoubleZero's 2Z token receiving a similar NAL in September. Perhaps Multicoin Capital recognized the significant compliance potential of these two DePIN projects early on, or perhaps their successive NAL grants were facilitated by Multicoin Capital. These continuous positive signals indicate that the SEC's regulatory approach is shifting from past enforcement measures to conditional compliance guidance. With the support of its new leadership, the SEC is attempting to establish a "token taxonomy" to differentiate between utility tokens and investment contracts. The emergence of NAL provides regulatory protection for projects with utility value. This regulatory clarity may significantly reduce compliance risks in the DePIN market. The compliance cost of the ENERGY token will be the sacrifice of business model flexibility. NAL is an administrative decision. The SEC will conduct an in-depth review of Fuse Energy's business model based on the core standards of U.S. securities law, namely the Howey Test, and make a judgment based on specific facts and circumstances. Therefore, NAL has strict limitations. The SEC stated in its announcement that any different facts or circumstances could lead the department to different conclusions. This wording will impose long-term compliance constraints on Fuse Energy, effectively "locking in" Fuse's business model, token issuance method, and marketing strategy in its SEC filings. Any attempt by Fuse to define the ENERGY token as an investment contract, or to imply that its value will increase due to the project's management efforts, will constitute legal risk and could lead to the SEC revoking NAL. In short, this compliance will sacrifice flexibility in business models. Fuse Energy's key to circumventing Howey's test lies in the fact that the project's token economics model caused it to fail to meet the fourth element of an investment contract, namely, the reasonable expectation that profits will come from "the efforts of others". Fuse Energy's core argument is that users acquire ENERGY tokens for consumption and rewards, not for investment. How to acquire: Users do not directly invest money to earn ENERGY tokens, but rather participate in network activities and contribute physical resources, including reducing energy consumption during peak hours, using electric vehicle charging stations, and storing solar energy. This makes the incentive of ENERGY tokens more like a "loyalty reward" for environmentally friendly behavior. Distributed effort: In Fuse Energy's architecture, the increase in token value depends primarily on the efforts and contributions of a large number of participants (i.e., users' own device deployment and operation), rather than solely on the centralized management and efforts of the Fuse team. This legal justification for "distributed effort" may lay a solid regulatory compliance foundation for the DePIN project. To further decouple the token from the project's financial success, Fuse has adopted a de-investment approach in its token value design. The redemption value of the ENERGY token is pegged to Fuse's profit margin and the average market price of the token at the time of its use. This design aims to ensure that ENERGY is viewed as an immediate utility token, encouraging users to consume it quickly (e.g., to obtain electricity discounts or carbon offsets). Since the value of the ENERGY token does not depend on Fuse's financial success, users are less motivated to hoard tokens in anticipation of future performance gains. These factors combined led the SEC to determine that the ENERGY token did not meet the definition of an investment contract. Beyond token compliance, Fuse still faces regulatory challenges on the business side. NAL has temporarily resolved the compliance risk of ENERGY tokens being treated as securities, but Fuse Energy is not now completely worry-free. Fuse sacrificed token liquidity for compliance. Users cannot freely transfer tokens, and the exit channels for funds are limited and singular, significantly reducing the asset's attractiveness. If Fuse Energy becomes complacent and changes its products or token mechanisms (such as opening up secondary market trading or changing pricing strategies), or if its actual operations do not match its stated facts, NAL will not be legally binding. The SEC can withdraw its application and initiate enforcement proceedings at any time, posing a risk of regulatory backlash. Therefore, despite the fact that the ENERGY token has been "de-securitized," Fuse still has a responsibility to increase its operational transparency, disclose the risks of the project, and strengthen education for market participants to ensure that users do not misunderstand it as a traditional investment contract. It is worth noting that the energy sector is a highly localized market, typically subject to strict regulation by state and local utility commissions. Regulatory compliance and licensing: Fuse will likely spend significant resources dealing with complex administrative procedures to obtain the licenses and approvals required to operate in different states or territories. Potential policy constraints from utility companies: Traditional utility companies typically possess a mature customer base, infrastructure, and political influence. These companies may leverage their brand advantage to hinder the growth of retail providers like Fuse and competitors, and further restrict the development space of non-utility developers by implementing regulatory policies related to renewable energy. The SEC's approval of Fuse represents a rational return for regulators to the niche market of "utility tokens." For the industry, this is both a shot in the arm and a wake-up call: compliance often comes at the cost of sacrificing investment value and liquidity. While celebrating this regulatory breakthrough, the market needs to clearly recognize that this is merely an endorsement of a specific business model, not a euphoria leading to the complete "de-securitization" of tokens.Author: Jae, PANews Another project in the crypto space has received the green light from the SEC (Securities and Exchange Commission). The SEC recently issued a No-Action Letter (NAL) to Fuse Crypto Limited (hereinafter referred to as Fuse) regarding its native token, Energy Dollar, formally confirming that under certain issuance and sale structures, the ENERGY token will not be considered a security. This development not only gives Fuse a compliance advantage, but also means that the DePIN (Decentralized Physical Infrastructure Network) track can more easily complete the compliance puzzle compared to other tracks. SEC approves Fuse to issue ENERGY tokens On November 24, the SEC issued a crucial NAL (Non-Allowed Decision) regarding Fuse's ENERGY token. This decision further demonstrates the SEC's systemic shift in regulatory attitude, especially towards blockchain projects aimed at solving real-world problems. Fuse Energy is a DePIN project focused on energy technology innovation. Its core business is an energy network operating on the Solana blockchain, which incentivizes home users to install and use DERs (distributed energy resources), such as rooftop solar panels, electric vehicle charging stations, and home energy storage batteries, through a reward system. Fuse aims to coordinate these decentralized resources, helping to deconstruct the power grid and manage load pressure, thereby alleviating grid congestion. NAL stated that as long as Fuse strictly adheres to the issuance and sale methods described in its filing on November 19, the SEC will not take enforcement action against it under Section 5 (Registration of Issuance) of the Securities Act of 1933 and Section 12(g) (Registration of Equity Securities) of the Exchange Act of 1934. The compliance exemption for the ENERGY token is not an isolated case. Multicoin Capital, heavily invested in the DePIN sector, led funding rounds of $12 million and $28 million for DePIN projects Fuse and DoubleZero, respectively. Coincidentally, Fuse's NAL is the second similar document issued by the SEC in a short period, following DoubleZero's 2Z token receiving a similar NAL in September. Perhaps Multicoin Capital recognized the significant compliance potential of these two DePIN projects early on, or perhaps their successive NAL grants were facilitated by Multicoin Capital. These continuous positive signals indicate that the SEC's regulatory approach is shifting from past enforcement measures to conditional compliance guidance. With the support of its new leadership, the SEC is attempting to establish a "token taxonomy" to differentiate between utility tokens and investment contracts. The emergence of NAL provides regulatory protection for projects with utility value. This regulatory clarity may significantly reduce compliance risks in the DePIN market. The compliance cost of the ENERGY token will be the sacrifice of business model flexibility. NAL is an administrative decision. The SEC will conduct an in-depth review of Fuse Energy's business model based on the core standards of U.S. securities law, namely the Howey Test, and make a judgment based on specific facts and circumstances. Therefore, NAL has strict limitations. The SEC stated in its announcement that any different facts or circumstances could lead the department to different conclusions. This wording will impose long-term compliance constraints on Fuse Energy, effectively "locking in" Fuse's business model, token issuance method, and marketing strategy in its SEC filings. Any attempt by Fuse to define the ENERGY token as an investment contract, or to imply that its value will increase due to the project's management efforts, will constitute legal risk and could lead to the SEC revoking NAL. In short, this compliance will sacrifice flexibility in business models. Fuse Energy's key to circumventing Howey's test lies in the fact that the project's token economics model caused it to fail to meet the fourth element of an investment contract, namely, the reasonable expectation that profits will come from "the efforts of others". Fuse Energy's core argument is that users acquire ENERGY tokens for consumption and rewards, not for investment. How to acquire: Users do not directly invest money to earn ENERGY tokens, but rather participate in network activities and contribute physical resources, including reducing energy consumption during peak hours, using electric vehicle charging stations, and storing solar energy. This makes the incentive of ENERGY tokens more like a "loyalty reward" for environmentally friendly behavior. Distributed effort: In Fuse Energy's architecture, the increase in token value depends primarily on the efforts and contributions of a large number of participants (i.e., users' own device deployment and operation), rather than solely on the centralized management and efforts of the Fuse team. This legal justification for "distributed effort" may lay a solid regulatory compliance foundation for the DePIN project. To further decouple the token from the project's financial success, Fuse has adopted a de-investment approach in its token value design. The redemption value of the ENERGY token is pegged to Fuse's profit margin and the average market price of the token at the time of its use. This design aims to ensure that ENERGY is viewed as an immediate utility token, encouraging users to consume it quickly (e.g., to obtain electricity discounts or carbon offsets). Since the value of the ENERGY token does not depend on Fuse's financial success, users are less motivated to hoard tokens in anticipation of future performance gains. These factors combined led the SEC to determine that the ENERGY token did not meet the definition of an investment contract. Beyond token compliance, Fuse still faces regulatory challenges on the business side. NAL has temporarily resolved the compliance risk of ENERGY tokens being treated as securities, but Fuse Energy is not now completely worry-free. Fuse sacrificed token liquidity for compliance. Users cannot freely transfer tokens, and the exit channels for funds are limited and singular, significantly reducing the asset's attractiveness. If Fuse Energy becomes complacent and changes its products or token mechanisms (such as opening up secondary market trading or changing pricing strategies), or if its actual operations do not match its stated facts, NAL will not be legally binding. The SEC can withdraw its application and initiate enforcement proceedings at any time, posing a risk of regulatory backlash. Therefore, despite the fact that the ENERGY token has been "de-securitized," Fuse still has a responsibility to increase its operational transparency, disclose the risks of the project, and strengthen education for market participants to ensure that users do not misunderstand it as a traditional investment contract. It is worth noting that the energy sector is a highly localized market, typically subject to strict regulation by state and local utility commissions. Regulatory compliance and licensing: Fuse will likely spend significant resources dealing with complex administrative procedures to obtain the licenses and approvals required to operate in different states or territories. Potential policy constraints from utility companies: Traditional utility companies typically possess a mature customer base, infrastructure, and political influence. These companies may leverage their brand advantage to hinder the growth of retail providers like Fuse and competitors, and further restrict the development space of non-utility developers by implementing regulatory policies related to renewable energy. The SEC's approval of Fuse represents a rational return for regulators to the niche market of "utility tokens." For the industry, this is both a shot in the arm and a wake-up call: compliance often comes at the cost of sacrificing investment value and liquidity. While celebrating this regulatory breakthrough, the market needs to clearly recognize that this is merely an endorsement of a specific business model, not a euphoria leading to the complete "de-securitization" of tokens.