gm from the Day One Law team!

Today’s legal update includes:

• SEC Grants No-Action Relief

• Dusting: A Future Property Law Issue?

• Democrats’ Controversial Proposal Leaks

SEC grants No-Action Relief

In a milestone for decentralized infrastructure, the SEC’s Division of Corporation Finance granted no-action relief to DoubleZero, a DePIN project developing a peer-to-peer network for underutilized fiber-optic capacity.

The decision marks the first time the agency has formally recognized that a DePIN token can function as a non-security if used to compensate network participants for providing real-world services.

Commissioner Hester Peirce, in a statement titled “Deep In,” praised the decision as an example of “fostering innovation without expanding our reach beyond what Congress has mandated.” She emphasized that DoubleZero’s 2Z tokens “are neither shares of stock in a company, nor promises of profits from the managerial efforts of others. They are functional incentives designed to encourage infrastructure buildout.”

The request for no-action relief was centered on the programmatic distribution of the project’s native 2Z token, which is issued to Network Providers (who supply the fiber-optic links) and Resource Providers (who calculate and verify those network contributions).

This decision signals a shift within the SEC towards distinguishing efforts-based contributions from investment activity, at least when tokens are used to compensate participants. You can read the full no-action letter here.

You should know

While limited to DoubleZero’s fact pattern, this decision is an important proof point for projects distributing tokens to network contributors rather than investors. Key elements that made this work: (i) clear utility tied to measurable off-chain services, (ii) no capital-raising component, and (iii) transparent distribution mechanics.

Other DePIN or RWA-style projects with verifiable service inputs may consider pursuing similar relief if structured around work-for-token issuance. We’re tracking whether SEC staff signal that this framework will extend to compute or bandwidth networks in upcoming guidance.

Property Law meets the Mempool

This summer, an anonymous actor dusted over 39,000 Bitcoin addresses (holding a combined ~2.33M BTC) with “legal notices”, claiming “constructive possession” of wallets deemed “lost or abandoned,” per an analysis by Galaxy researcher Zack Pokorny.

The notices, sent using Bitcoin’s OP_RETURN field, targeted wallets that had been dormant for an average of six years. These notices told owners to prove control within ~90 days or risk “relinquishment.” In what might have been a reactionary move, one of the dusted wallets with 80,000 BTC moved shortly after receiving the notice.

As I wrote on X, this isn’t a crypto stunt so much as a real-life bar-exam hypothetical. While no legal claims have followed, the campaign highlights gaps in how property law applies to self-custody, pseudonymous ownership, and constructive notice on public ledgers.

You should know

This notice dusting stunt raises unresolved property law questions about “possession” in a self-custody world.

Key open issues:

• Whether long-dormant wallets can be treated as abandoned property under existing state laws.

• Whether on-chain publication (like OP_RETURN messages) could ever satisfy constructive notice requirements.

• What enforcement or transfer mechanism could exist if such claims were recognized.

Bottom line: the application of abandonment doctrines to crypto self-custody is new legal territory. Expect more edge cases as dormant wallets grow in value and legal theories test blockchain notice as a concept.

Senate Democrats’ DeFi Proposal Leaked

A leaked Democratic proposal circulating in the Senate would classify any front-end interface serving customers in a DeFi protocol as a “broker,” subjecting them to SEC and Treasury oversight. The plan, first reported by Politico Pro, represents the most aggressive legislative approach to decentralized finance yet, one that could reshape how open-source developers and platforms operate in the U.S.

The document, apparently tied to ongoing staff discussions on digital asset market structure, diverges from the market structure frameworks in both the House and Senate by including a provision that anyone “facilitating user access” to decentralized protocols could be required to register as a broker, comply with KYC and AML rules, and adhere to investor-protection standards traditionally reserved for financial intermediaries.

Industry advocates were quick to point out that the proposal, which has not yet been formally introduced, could chill DeFi innovation and undermine U.S. competitiveness. You can find the six-page proposal here.

You should know

If adopted, this would represent a fundamental shift in how the U.S. regulates DeFi front ends.

1. “Broker” treatment would impose KYC/AML and registration obligations on front-end developers and interface operators, even if the underlying protocol is autonomous.

2. The proposal would effectively move DeFi compliance obligations to the application layer, treating UI operators like custodial intermediaries.

3. Industry lobbying will likely focus on narrowing the definition of “facilitating user access.”

Teams operating front ends or deploying open-source code in the U.S. should begin evaluating whether any part of their stack could be construed as “broker” activity if this proposal advances.

Listen To …

Law of Code

And if you’re the podcast type, I’ll recommend the recent Law of Code podcast episode on the GENIUS Act (on Apple or Spotify).

It’s a deep dive into how stablecoins could shape the future, what the GENIUS Act requires from stablecoin issuers and a potential loophole for stablecoin holders to receive interest.

That’s it for your legal update.

As always, please reach out if you have questions about the implications of any of the above, or just want to riff on what we’re seeing in the market.

Talk soon.

Nick Pullman
Day One Law