The SEC approved DoubleZero’s 2Z token and said it is not a security

The U.S. Securities and Exchange Commission (SEC) has reportedly approved a major project, DoubleZero, confirming that its digital token, 2Z, will not be classified as a security.

This announcement came after the commission granted the initiative a “No-Action Letter.”  This letter marks a historic accomplishment for the project.

In an X post, DoubleZero explained that a No-Action Letter meant that SECGov’s Division of Corporation Finance investigated the functionality of its 2Z token’s programmatic distributions and concluded that it will not recommend any enforcement action to the Commission based on the information provided.

DoubleZero’s approval improves crypto firms’ confidence in their operations 

Several crypto analysts commented on DoubleZero’s approval. According to them, this is a game-changer to the crypto ecosystem as it will provide much-needed clarity and lay the foundation for new utility-based cryptocurrency initiatives.

They further pointed out that the agency’s ruling has created a conducive environment for crypto companies, which have faced uncertainties for years due to concerns that the agency might view their tokens as illegal securities. The analysts’ remarks highlight that the commission’s decision has illustrated a clear example of what a legal, utility-focused token entails. 

In the meantime, DoubleZero aims to enhance communication efficiency in blockchain technology by establishing a global network that utilizes underutilized subsea and land-based fiber optic cables. 

Its token, the energy source for this network, is a utility tool within the ecosystem. The system is crucial for network participants, commonly referred to as validators, as it enables them to access bandwidth and earn staking rewards for their contributions.

In a letter to the SEC, DoubleZero convinced the commission that individuals prefer 2Z for its intended purpose and not because they aim to get rich from the firm’s leaders.

Notably, the SEC’s decision marks another notable success in the cryptocurrency industry, following Ripple’s legal challenges with the agency. This is because it is based on a popular lawsuit from 2020 that involved the commission and Ripple Labs.

DoubleZero’s approval enhances clarity in crypto-related regulations 

The SEC had filed a lawsuit against Ripple, claiming that its XRP token was a security that was not registered. This resulted in a lengthy court trial; however, after some time, a federal judge drew an important distinction.

Based on the judge’s argument, Ripple’s token appeared to be a security because the firm sold it to large investors. Still, when individuals traded XRP on public exchanges daily, it was not considered a security.

This was a historic moment in the history of cryptocurrencies. Indirectly, it concluded that a token is not automatically considered a security. It also classified these tokens by how they are being sold and used. 

This concept is further developed by the DoubleZero ruling, which approves a project before it even deploys its network.

The letter from the SEC to DoubleZero is also important to the crypto space. This is because it suggests that US regulators are beginning to distinguish between tokens designed for speculation and those with a legitimate use case.

In related development, the SEC has withdrawn all delay notices for multiple crypto ETFs, including Solana (SOL), XRP, Hedera (HBAR), Litecoin (LTC), and Cardano (ADA), signaling a significant step forward in approving cryptocurrency-based exchange-traded funds.

This decision follows the SEC’s recent approval of the Generic Listing Standards for crypto ETFs, which take effect on October 1. The approval demonstrates to exchanges and fund managers how to list and operate crypto ETFs, and it enables the SEC to process applications more efficiently while ensuring that all funds meet the updated standards.

The SEC removed all the delay notices that had halted or slowed down the approval process for various crypto ETFs. This decision demonstrates that the agency is now prepared to permit multiple crypto ETFs to proceed simultaneously, rather than prolonging their review periods. Such delays had made investors, fund managers, and exchanges uncertain; however, this new change gives them hope that new crypto funds will become available, making the market more predictable.

Solana ETFs from popular companies, including Bitwise, VanEck, Fidelity, Canary, 21Shares, and Invesco Galaxy, can now proceed without further delay. XRP ETFs from companies like Bitwise, Franklin, WisdomTree, Canary, CoinShares, and 21Shares can also move faster through the approval process because their delay notices were lifted.

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