The SEC's Division of Corporation Finance said it views Canton Coin as a digital commodity and will not recommend enforcement action over its programmatic issuance under certain conditions. The letter rests on the specific facts Canton submitted and does not decide whether the token is a security.
The U.S. Securities and Exchange Commission's Division of Corporation Finance views Canton Coin (CC) as a digital commodity and will not recommend enforcement action over its programmatic issuance under certain conditions. The division set out its position in a no-action letter published Tuesday.
Why the division reached its view
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.
Deputy Chief Counsel Jonathan Ingram wrote that the division will not recommend enforcement action if Canton Coin is minted programmatically by Super Validators, Validators and application providers, as described in the letter, without registration under Section 5 of the Securities Act or Section 12(g) of the Exchange Act.
However, the letter reflects the division's enforcement position based on the specific facts and representations Canton submitted. It does not express a legal conclusion on the issues presented, including whether Canton Coin is a security.
Industry reaction and market context
a16z partner Miles Jennings welcomed the staff's position and argued it could signal a broader regulatory path for blockchain network tokens. According to Jennings on X: "Network tokens are digital commodities."
Canton Network is a blockchain infrastructure protocol developed by Digital Asset. In May, 21Shares became the first U.S. ETF issuer to offer direct exposure to CC, the network's native utility token.
Then 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.
Source: The Block
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