SEC division views Canton Coin as digital commodity in no-action letter

The U.S. Securities and Exchange Commission's Division of Corporation Finance said it views Canton Coin (CC) as a digital commodity and will not recommend enforcement action over its programmatic issuance under certain conditions.

In a no-action letter published Tuesday, the division said Canton Coin derives its value from the programmatic operation of the Canton Network and supply-and-demand dynamics, rather than expectations of profit from the managerial efforts of others. It also cited the network's lack of a central party.

"Based on the facts presented, the Division will not recommend enforcement action to the Commission if, in reliance on your opinion as counsel, Canton Coin is minted programmatically by Super Validators, Validators and application providers, in the manner and under the circumstances described in your letter, without registration under Section 5 of the Securities Act or Section 12(g) of the Exchange Act," Deputy Chief Counsel Jonathan Ingram wrote.

The letter reflects the Division of Corporation Finance's enforcement position based on the specific facts and representations submitted by Canton and does not express a legal conclusion on the issues presented, including whether Canton Coin is a security.

Canton Network is a blockchain infrastructure protocol developed by Digital Asset that aims to enable secure, privacy-enabled, and interoperable transactions across institutions and networks.

In May, 21Shares became the first U.S. ETF issuer to offer direct exposure to CC, the network's native utility token.

In June, Digital Asset raised $355 million in a funding round led by Andreessen Horowitz's a16z crypto fund to expand the Canton ecosystem and accelerate institutional adoption of its blockchain infrastructure.

a16z partner Miles Jennings welcomed the SEC staff's position, arguing it could signal a broader regulatory path for blockchain network tokens.

"Incredible. @CantonNetwork just received no action relief from the SEC for its network token," Jennings wrote Tuesday on X. "The @SECGov's token taxonomy from March and follow up FAQs have now created a clear pathway out of securities laws—Network tokens are digital commodities."