Since 2019, the SEC has issued a limited number of no-action letters addressing digital asset projects. But 2025 marked a watershed year: the Crypto Task Force reopened the no-action letter process after a multi-year pause, and on December 11, 2025, the Division of Trading and Markets issued a landmark no-action letter to the Depository Trust Company (DTC) allowing DTC to operate tokenization services on certain permissionless blockchains on a trial basis. DTC plans to pilot tokenization in H1 2026 with public launch in H2 2026. Additional 2025 no-action guidance clarified that certain USD-backed stablecoins are not securities (April 2025), that meme coins purchased for entertainment typically do not involve securities, and that broker-dealers may hold crypto and tokenized assets subject to prescribed requirements.
TurnKey Jet No-Action Letter (April 2019)
TurnKey Jet, Inc. received the SEC’s first digital asset no-action letter on April 3, 2019. The company proposed issuing tokens that would function as prepaid vouchers for booking charter jet services on its platform.
Key Conditions
The TurnKey Jet letter imposed seven specific conditions that the company agreed to maintain:
No secondary market transfers. Tokens could only be used on the TurnKey Jet platform and could not be transferred to other users, traded on exchanges, or resold. This eliminated the investment characteristic that the Howey test identifies as central to securities classification.
Fixed price. Each token was sold at a fixed price of one dollar per token and could only be redeemed for one dollar of jet charter services. There was no mechanism for appreciation, eliminating the “reasonable expectation of profits” prong.
Immediate functionality. The platform was operational at the time of token sale, meaning purchasers could immediately use tokens for their intended purpose. This addressed the SEC Framework’s concern about pre-functional tokens.
Marketing restrictions. TurnKey Jet agreed not to market the tokens as investment opportunities, emphasize potential returns, or suggest that tokens could appreciate in value.
Redemption at face value. Tokens could be repurchased by TurnKey Jet at face value, ensuring a floor price and eliminating speculative downside.
Purchase limits. Token purchases were limited to amounts reasonably expected to be used for charter jet services, preventing bulk acquisition for investment purposes.
No profit-sharing. Token holders received no rights to TurnKey Jet’s revenues, profits, or assets — purely consumptive utility.
Precedential Analysis
The TurnKey Jet conditions effectively describe a closed-loop prepaid card denominated in blockchain tokens. The no-action relief confirms that a digital asset with no transferability, no appreciation potential, no revenue rights, and immediate utility does not constitute a security — a conclusion most securities lawyers would have reached without SEC guidance.
The letter’s utility as precedent is therefore limited. Projects with any meaningful blockchain functionality — including peer-to-peer transferability, market-driven pricing, or speculative characteristics — cannot rely on TurnKey Jet’s conditions.
Pocketful of Quarters No-Action Letter (July 2019)
Pocketful of Quarters, Inc. received no-action relief for an in-game token called “Quarters” designed for use across multiple gaming platforms. Unlike TurnKey Jet, Quarters could be transferred between users, making this letter somewhat more relevant to typical token projects.
Key Conditions
Platform-restricted utility. Quarters could only be used within participating gaming platforms to purchase in-game items, extra lives, or other gaming features. The token had no utility outside the gaming ecosystem.
Transfer limitations. While Quarters could be transferred between users within the gaming ecosystem, they could not be traded on cryptocurrency exchanges or listed on any external marketplace.
Fixed purchase price. Quarters were sold at a fixed price, eliminating appreciation expectations at the point of purchase.
No redemption for fiat. Users could not convert Quarters back to US dollars or any other fiat currency, preventing the token from functioning as an investment.
Consumptive use emphasis. All marketing focused exclusively on gaming utility, with no references to investment potential, scarcity, or appreciation.
Significance
The Pocketful of Quarters letter expanded no-action relief slightly beyond TurnKey Jet by permitting user-to-user transfers within a closed ecosystem. However, the prohibition on external exchange trading and fiat redemption significantly limits the letter’s applicability to projects building open, interoperable token systems.
Subsequent No-Action Requests
Several digital asset projects have sought no-action relief since 2019, with mixed results. The SEC has not published a comprehensive list of denied requests, but market participants have reported that the staff’s willingness to grant relief remains extremely narrow.
Projects that have sought guidance include decentralized governance tokens, utility tokens for cloud computing services, and reward tokens for content creation platforms. The common thread in unsuccessful applications appears to be any feature enabling secondary market price discovery — even if the token has genuine utility.
Implications for Token Issuers
The no-action letter program provides a theoretical path to regulatory clarity, but the conditions imposed are so restrictive that few commercially viable projects can satisfy them. The typical token project — one that involves transferable tokens, market-driven pricing, and some degree of speculative interest — falls outside the narrow parameters established by existing letters.
For projects that cannot obtain no-action relief, the alternative paths are: (1) register the token offering under Section 5 of the Securities Act, (2) conduct the offering under an exemption such as Reg D 506(c) or Reg A+, or (3) structure the token to fall outside the Howey test entirely — a challenging task given the SEC’s expansive interpretation.
The no-action letter process itself is resource-intensive. Applicants typically spend $100,000-$300,000 in legal fees preparing the submission, with processing times ranging from 3 to 12 months. Given the restrictive conditions imposed on successful applications, many practitioners advise clients to proceed directly to an offering exemption rather than seeking no-action relief.
For platform operators evaluating compliant token structures, see our analysis of tZERO’s ATS model, Securitize’s transfer agent approach, and our comprehensive guide to ATS registration requirements. For comparison with international approaches to token classification, see our analysis of US vs. Swiss tokenization frameworks.
Future of the No-Action Letter Program
The SEC’s appetite for issuing digital asset no-action letters appears to have diminished since 2019. No significant new letters have been published, and the Commission’s primary engagement with the industry has shifted to enforcement actions and, more recently, to rulemaking proposals under new leadership.
Commissioner Peirce’s proposed Token Safe Harbor — which would have provided a three-year development period exempt from securities registration — represented an alternative approach that never gained Commission support. The safe harbor proposal directly addressed the limitations of the no-action letter process by providing broad, principles-based relief rather than fact-specific, narrow conditions.
Comparison: No-Action Letter vs. Offering Exemption vs. Registration
| Pathway | Cost | Timeline | Outcome | Ongoing Obligations |
|---|---|---|---|---|
| No-action letter | $100K-$300K | 3-12 months | Non-security classification | Maintain stated conditions |
| Reg D 506(c) | $250K-$1M | 2-4 months | Exempt security offering | Form D filing, state notice |
| Reg A+ | $500K-$2M | 6-12 months | Qualified offering to all investors | Ongoing SEC reporting |
| Section 5 registration | $2M-$5M | 12-24 months | Fully registered security | Full Exchange Act reporting |
For most token projects, the offering exemption pathway (particularly Reg D 506(c)) provides a more practical route to market than the no-action letter process. The exemption pathway accepts the security classification and works within it, rather than attempting to demonstrate non-security status under conditions so restrictive that they eliminate most blockchain functionality.
Lessons from Denied and Withdrawn Requests
While the SEC does not publish a comprehensive list of denied no-action letter requests, market participants have shared insights from unsuccessful applications:
DeFi governance tokens. Multiple governance token projects reportedly sought no-action relief, arguing that voting rights constituted utility rather than investment. The staff’s position appears to be that governance rights that affect token value create profit expectations inconsistent with non-security classification.
Staking reward tokens. Projects offering staking rewards sought to characterize rewards as compensation for network services rather than investment returns. The staff reportedly viewed staking rewards as functionally equivalent to dividends, weighing toward securities classification. This position is consistent with the SEC’s enforcement actions against yield-generating platforms like BlockFi, which was ordered to pay $100 million in penalties for offering unregistered crypto lending products that the SEC classified as securities.
Metaverse tokens. Virtual world tokens with in-game utility but secondary market tradability reportedly could not satisfy the staff’s conditions. The ability to profit from token price appreciation on exchanges — even if the token also had consumptive utility — was viewed as creating investment expectations.
The pattern across denied requests confirms that the SEC views any mechanism enabling profit through price appreciation as weighing toward securities classification — consistent with the 2019 Framework’s emphasis on economic reality over labels.
The Role of FinHub
No-action letter requests for digital assets are typically processed through FinHub, the SEC’s Strategic Hub for Innovation and Financial Technology. FinHub coordinates review across the Division of Corporation Finance and, where relevant, the Division of Trading and Markets. The quality of the engagement experience has varied significantly across SEC administrations — from productive dialogue under Chair Clayton to limited engagement under Chair Gensler to renewed openness under the current leadership.
For projects considering the no-action letter route, engaging experienced securities counsel with established FinHub relationships significantly improves the process. Counsel who have successfully navigated prior no-action requests understand the staff’s priorities and can structure submissions that address likely concerns proactively.
Alternative Approaches to Classification Certainty
Given the limitations of the no-action letter process, several alternative approaches to classification certainty have emerged:
Commissioner Peirce’s Token Safe Harbor. The proposed three-year development exemption would provide broader relief than individual no-action letters, though it has not been adopted.
FIT21 Act certification. If enacted, FIT21’s certification process would provide a statutory mechanism for confirming non-security status based on quantitative decentralization metrics — a more predictable pathway than the no-action letter process.
Crypto Task Force guidance. The reconstituted task force has signaled interest in providing clearer classification guidance that could reduce reliance on case-by-case no-action determinations.
For enforcement context on how tokens without no-action relief have been treated, see our tracker. For FINRA rules applicable to broker-dealers handling tokens with uncertain classification, see our regulatory guide. For the SEC’s official no-action letter archive, see SEC No-Action Letters.
No-Action Letters in International Context
The SEC’s restrictive no-action letter approach contrasts with guidance mechanisms in other jurisdictions. FINMA (Switzerland) has published multiple guidelines on token classification that provide clearer, broader guidance for non-security tokens. The UK FCA’s regulatory sandbox program has issued no-action-equivalent comfort letters to dozens of token projects, with conditions less restrictive than the SEC’s. Singapore’s MAS has published extensive guidance on when digital payment tokens fall outside securities regulation.
This international contrast highlights a competitive concern: token projects seeking regulatory clarity may choose to launch in jurisdictions with more accommodating guidance frameworks, potentially reducing U.S. market access and innovation. Our US vs. Swiss token classification and US vs. EU regulation comparisons explore these competitive dynamics.
The SEC’s Crypto Task Force has acknowledged this competitive dynamic, with task force roundtable participants arguing that modernizing the no-action letter process — or replacing it with categorical guidance — is necessary to maintain U.S. competitiveness in digital asset innovation. Whether this competitive pressure translates into more accommodating guidance remains to be seen.
For issuers who cannot obtain no-action relief and whose tokens satisfy the Howey test, compliance through the offering exemption framework remains the required path — Reg D 506(c) for domestic accredited investor offerings, Reg A+ for retail access, and Reg S for offshore components.
Until the regulatory landscape evolves through legislation or rulemaking, the existing no-action letters remain the only positive SEC guidance on digital asset structures that avoid securities classification. Their narrow conditions, however, make them more useful as boundary markers than as practical compliance templates for the tokenized securities industry. For FINRA’s role in processing no-action determinations for broker-dealers handling digital assets, see our entity profile. For Form D filing requirements that apply when the no-action letter route is unavailable, see our offering exemptions guide.