SEC Treats Canton Coin as Digital Commodity, Grants No-Action Relief for Token Issuance

The U.S. Securities and Exchange Commission said it views Canton Coin, or CC, as a digital commodity and would not recommend enforcement action against token issuance that meets certain conditions.

The Block reported on November 3 that the SEC’s Division of Corporation Finance released a no-action letter laying out that position on Canton Coin’s issuance structure.

The division said Canton Coin’s value is driven by the Canton Network’s automated operations and market supply and demand, rather than by expectations of profit tied to the managerial efforts of a specific company or individual. It also cited the absence of any centralized entity controlling the network.

Under that view, the division said it would not recommend enforcement action over securities-law registration requirements if super validators, validators and application providers automatically issue Canton Coin under the submitted conditions. It added that the decision is a staff position limited to the facts presented and does not amount to a final legal determination that Canton Coin is not a security.

The Canton Network is a blockchain infrastructure platform developed by Digital Asset. It is designed to allow financial institutions to connect assets and data while preserving security and privacy. Canton Coin is the network’s native utility token.

Earlier, asset manager 21Shares launched a US exchange-traded fund in May that gives investors direct exposure to Canton Coin. In June, Digital Asset raised $355 million in a funding round led by a16z crypto, the digital-asset investment arm of Andreessen Horowitz, as it pushed to expand the ecosystem.

Miles Jennings, a partner at a16z, welcomed the SEC’s stance. A regulatory path for classifying network tokens as digital commodities is becoming clearer, he said, adding that the decision could serve as a reference point for other blockchain projects.