The U.S. Securities and Exchange Commission’s Division of Corporation Finance said it views Canton Coin, or CC, as a digital commodity and would not recommend enforcement action over its programmatic issuance under specified conditions.
In a no-action letter, the division said that if Canton Coin is minted programmatically by Super Validators, Validators, and application providers in the manner described, it would not recommend action for issuing the token without registration under the Securities Act or the Exchange Act.
Staff position tied to specific facts
The position was set out by Deputy Chief Counsel Jonathan Ingram. According to the letter, the staff’s view rests on the particular facts and representations presented in connection with Canton Coin and the Canton Network.
The division said its stance is an enforcement position rather than a definitive legal ruling. It specifically stated that the letter does not amount to a legal conclusion on whether Canton Coin is a security.
Why the division described CC as a digital commodity
In explaining its view, the Division of Corporation Finance said Canton Coin’s value comes from the Canton Network’s programmatic operation and from supply-and-demand dynamics. It contrasted that with an expectation of profit based on the efforts of others.
The letter also pointed to the network’s lack of a central party as part of the reasoning behind the staff’s assessment.
Background on Canton Network and recent developments
Canton Network is a blockchain infrastructure protocol developed by Digital Asset. It is designed to support secure, privacy-enabled and interoperable transactions across institutions and networks.
Canton Coin is the network’s native utility token. In May, 21Shares became the first U.S. ETF issuer to offer direct exposure to CC. A month later, Digital Asset announced a $355 million funding round led by a16z crypto to expand the Canton ecosystem and speed institutional adoption.
What comes next
The no-action letter is limited to the issuance approach described by the parties involved and does not establish a blanket determination for all token structures or future facts. Its practical effect is that SEC staff said it would not recommend enforcement action if Canton Coin is minted in the programmatic manner outlined in the request.
The response may draw attention because it outlines how SEC staff evaluated a network token it described as a digital commodity. Miles Jennings of a16z said the position could point to a broader regulatory route for blockchain network tokens, though the letter itself remains confined to Canton Coin and the specific representations before the staff.
Source: www.theblock.co