Fuse Crypto Limited received a letter from the SEC Division of Corporation Finance stating that the office will not recommend an enforcement action to the SEC if the company proceeds with the offering and selling of its token under the specified conditions. The letter from the division states that the division will not recommend an enforcement action if the company continues its offering and selling of the token under the conditions outlined in the letter.
It follows a request from Fuse that was sent to the agency last week. The company asked the agency to confirm that the FUSE token should not be considered a security. The token is a customer incentive within Fuse’s energy programs, where the customers are rewarded for their participation in sustainability-focused activities rather than for investment speculation. The FUSE program is about utility and participation of the consumer, not about the consumer expecting to make a profit.
Source: Fuse Energy
The Division, in its released statement on Monday, pointed out that the decision was made based on the facts and the conditions presented by Fuse only. The letter said that the position could be changed if there are any material differences in the way the token is issued, marketed, or used. The agency said, “Any different facts or conditions might require the Division to reach a different conclusion,” pointing to the fact that there is no blanket regulatory relief from being subject to regulation.
This is the second time in recent months that the SEC has issued a no-action letter concerning a token. In September, the agency made a similar decision for the 2Z token that is distributed by the decentralized physical infrastructure project DoubleZero. These approvals show that SEC regulators are gradually shifting their focus from blockchain-based projects that are designed for speculative investment to consumer-oriented platforms that use blockchain technology for loyalty programs or incentives.
Fuse operates energy businesses in America, installing electric vehicle chargers, rooftop solar panels, and other decentralized power systems. According to the company, the token facilitates the reduction of load on the national grids by encouraging customers to carry out distributed energy infrastructure. Through the program, participants can receive tokens for installing solar panels, EV charging devices, and smart energy gadgets.
In its November 19 regulatory filing, Fuse explained that its blockchain-based incentive model is energy-efficient and decentralizes distribution networks coordination. The company pointed out that the rapid deployment of smart grid systems call for the establishment of reward mechanisms that promote energy consumption and renewable adoption at scale.
Fuse argued in a letter to regulators that the company’s token should not be considered a security since it fails to satisfy the criteria of an investment contract under the Howey test. The firm stated that the users of the token would utilize FUSE as a means of consumption, not as a purchase made with the expectation of deriving a profit from someone else’s work or managerial efforts. “The Token is not an investment contract, and hence not a security,” the company said, implying that a utility token is the primary function, not an investment one.
The agency’s decision not to take action comes at a time when the SEC has been more open to working with the digital asset industry during the time of the Trump administration. The regulator has convened crypto-working groups, dropped current investigations, and introduced what it terms “Project Crypto”, aiming at regulatory framework adjustments for blockchain systems and token classifications.
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