SEC gives the green light! The energy DePIN project Fuse has received an exemption for issuing coins, with a $5 billion valuation financing imminent.

The U.S. Securities and Exchange Commission (SEC) issued a “No Action Letter” (NAL) for the ENERGY token of the blockchain energy project Fuse Energy, clearing key regulatory hurdles for its token issuance. This marks the SEC's second such exemption for a DePIN (Decentralized Physical Infrastructure Network) project in a short period, indicating that this sector demonstrates unique advantages in regulatory compliance. Meanwhile, Fuse, as a UK energy tech startup, is experiencing rapid business growth and is in a new round of financing with a valuation of up to $5 billion, a fivefold increase from four months ago. This case perfectly illustrates how “Blockchain + Physical Industry” projects can simultaneously gain regulatory recognition and attract traditional capital.

SEC's Regulatory Breakthrough: How Fuse Energy Token Can Avoid the Definition of “Security”?

For any blockchain project, obtaining regulatory clarity from the SEC is akin to receiving a crucial “passport.” On November 24, the SEC issued a “No-Action Letter” (NAL) to Fuse Crypto Limited concerning its native token Energy Dollar (ENERGY), which is a milestone document. In the letter, the SEC formally confirmed that as long as Fuse issues and sells ENERGY tokens in the specific manner described in its application submitted on November 19, the agency will not take enforcement action against it under U.S. securities laws, meaning that ENERGY tokens are not considered securities within the specified framework.

The core of this decision lies in Fuse successfully persuading the SEC that its token model does not meet the criteria for an “investment contract” as defined in the Howey Test, particularly failing to satisfy the key element that “profits are expected to come primarily from the efforts of others.” Fuse has constructed a compelling legal and business argument: first, the primary way users acquire ENERGY tokens is not by directly investing funds, but by participating in actual activities within its energy network, such as reducing consumption during peak electricity hours, using electric vehicle charging stations, or engaging in environmentally friendly practices like solar energy storage to earn “rewards.” This makes its token more like a “loyalty point” for specific behaviors rather than an investment tool.

Secondly, Fuse emphasizes that the increase in the value of its token network relies on the collective efforts and contributions of a large number of decentralized users, rather than solely depending on the centralized management of the Fuse team. This argument of “distributed effort” provides key insights into how DePIN projects can design incentive mechanisms in a compliant manner. To ensure that the token is not viewed as an investment, Fuse has even implemented a “de-investment” approach in the design of the token's value, linking its redemption value to project profitability and real-time market prices, aiming to encourage immediate consumption (such as exchanging for electricity bill discounts), rather than long-term hoarding for speculation.

Key Data and Compliance Points of the Fuse Energy Project

Regulatory Progress: Obtained SEC “No Action Letter” (NAL), ENERGY Token is not considered a security under certain conditions.

Business Scale: Serves over 200,000 households in the UK, with users saving an average of about £200 per year.

Financial Performance: Annual recurring revenue reached $300 million

Financing Update: Currently undergoing a new round of financing with an estimated valuation of approximately $5 billion, which is a 5-fold increase compared to the $1 billion valuation in July.

Core Logic of the Token: As a reward for users' environmentally friendly behaviors (such as peak-shifting electricity use and using solar energy), it encourages immediate consumption.

Compliance Costs: Token transfers are restricted, and the flexibility of the business model is strictly constrained by NAL terms.

Analysis of Compliance Advantages in the DePIN Track: Why Are “Pragmatists” More Favored by Regulators?

The NAL obtained by Fuse is not an isolated case. Just this September, another DePIN project, DoubleZero, also received a similar SEC exemption for its 2Z Token. The fact that two DePIN projects received regulatory green lights in a short period of time is no coincidence; it reveals a clear shift in the SEC's current regulatory mindset: for blockchain projects that address real-world problems and have clear practical utility for their tokens, regulators are showing greater openness and willingness to provide guidance.

Unlike many cryptocurrency projects that purely rely on financial speculation or vague narratives, the core of DePIN projects lies in leveraging token incentives to coordinate and mobilize real physical resources and manpower offline—whether it’s Fuse's distributed energy devices or the wireless networks, storage space, or sensor data of other projects. This characteristic of “combining virtual and physical” brings key compliance advantages: the issuance of tokens is directly tied to tangible contributions (such as providing energy or sharing bandwidth), and their value support is more easily interpreted as “service compensation” or “resource usage vouchers,” rather than speculative promises of future profits.

This reflects that under the new leadership, the SEC is attempting to establish a more detailed “token classification law” to distinguish between purely utility tokens and investment contracts. The emergence of NAL is a manifestation of this “conditional compliance guidance.” It provides a foreseeable compliance path for projects that can clearly demonstrate the consumption attributes of their tokens and do not primarily rely on the project party's single efforts to achieve value appreciation. Top venture capital firms like Multicoin Capital have already heavily invested in the DePIN track, and their investment logic must inherently include a forward-looking judgment on this regulatory trend. For the entire industry, this releases a positive signal: projects that deeply cultivate practical applications and create real value are receiving differentiated treatment at the regulatory level.

Under the Halo: The Cost of Compliance and the Challenges of Business Expansion

However, obtaining the SEC's NAL does not mean being free from worries; on the contrary, it is a “double-edged sword” that comes with significant compliance costs. The exemption of the NAL is strictly limited and conditional. The SEC clearly states in the document that any “different facts or circumstances” from those described in the application materials may lead to a change in conclusions. This means that Fuse's future business model, token issuance methods, and marketing strategies are all “locked” within the framework promised to the SEC.

The most direct cost is the sacrifice of the token's liquidity and financial attributes. To avoid the definition of securities, the transfer of ENERGY tokens is subject to strict restrictions, and users cannot freely trade in the secondary market. Although this meets regulatory requirements, it significantly weakens the appeal and capital efficiency of the token as an asset, shutting out many speculative users seeking price appreciation. In addition, any attempt by Fuse to imply that the value of the token will rise due to its team's efforts may trigger the risk of the SEC revoking the NAL and initiating enforcement proceedings.

At the business level, Fuse, as an energy supplier, faces more complex challenges. The energy industry is highly localized and subject to strict regulation, requiring Fuse to navigate different utility regulatory bodies (such as Ofgem in the UK) in each market it operates in, including the UK and potential future expansions, to obtain the necessary operating licenses. At the same time, it must compete with traditional utility giants like Octopus Energy, which have a strong customer base, infrastructure, and political influence. Recently, UK regulators increased capital adequacy requirements to ensure industry stability, which has led to difficulties for some emerging suppliers, raising the bar for Fuse's capital strength and operational robustness.

From Revolut to Energy Giants: Fuse's Business Frenzy and Capital Carnival

Peeling away the blockchain facade, Fuse is primarily an outstanding energy technology startup. Co-founded by former Revolut executives Alan Chang and Charles Orr, Fuse inherits the characteristics of rapid iteration and growth typical of fintech companies. Its core business is to provide competitively priced green electricity packages to households in the UK, integrating services such as electric vehicle charging, home solar power, and battery storage.

Market data proves its growth momentum: service household users have exceeded 200,000, saving users up to £200 each year and generating $300 million in annual recurring revenue. Even more noteworthy is its performance in the capital markets: in July, the company completed financing at a valuation of $1 billion; just four months later, new financing negotiations have pushed its valuation to approximately $5 billion, with potential lead investors including the well-known American investment fund Lowercarbon Capital and early supporter Balderton Capital. This valuation has reached more than half of its larger competitor Octopus Energy (with a valuation of $9 billion), demonstrating traditional capital's extreme optimism towards the 'energy transition + tech platform' model.

The narrative of Fuse is dual: from the perspective of traditional capital, it is a high-growth tech company that optimizes energy retail using technology and data, quickly acquires customers, and deploys its own renewable energy assets (such as its first solar farm built in Hampshire); from the perspective of the crypto world, it is a pioneering DePIN project that transforms the traditional power grid and realizes demand-side response using Blockchain and token economics. The fusion of these two narratives is fundamentally the reason why it can simultaneously attract the attention of the SEC and massive bets from venture capital.