Canton Coin (CC) has received no-action relief from the U.S. Securities and Exchange Commission’s staff, which classified the token as a digital commodity under its latest regulatory framework.
Summary
- The SEC’s Division of Corporation Finance has classified Canton Coin as a digital commodity in a November 3 no-action letter.
- SEC staff will not recommend enforcement action over Canton Coin’s programmatic issuance without securities registration under specified conditions.
- The decision cites Canton Network’s lack of a central controlling party and the token’s connection to network operations.
- The letter follows November 2 SEC guidance explaining decentralized governance, network control, and digital commodity classification.
- Canton Network already supports institutional tokenization projects involving DTCC, while regulated investment products provide exposure to its native token.
In a November 3 letter, the SEC’s Division of Corporation Finance said it would not recommend enforcement action over Canton Coin’s programmatic issuance without securities registration, provided the network follows the conditions described in its request.
The decision follows an October 30 submission from Canton’s legal representatives seeking clarity on the token’s regulatory treatment. It gives the network a specific enforcement assurance while relying on the facts presented to the regulator.
Canton Network, developed by Digital Asset, provides blockchain infrastructure for financial institutions handling tokenized assets, payments and settlement. Its native token supports the network’s operations through a system involving validators and application providers.
SEC explains why Canton Coin qualifies as a digital commodity
The SEC staff based its position on how Canton Coin operates within the network and where the token derives its value.
In the response signed by Deputy Chief Counsel Jonathan Ingram, the division said Canton Coin is “intrinsically linked to and derives its value from the programmatic operation of the Canton Network.”
The regulator considered supply and demand dynamics, along with representations that token holders do not depend on profits generated through the essential managerial efforts of others.
Another factor was Canton’s governance structure. The division accepted the network’s representation that it has no “central party” under the SEC’s March interpretation of cryptocurrency assets.
These findings supported the staff’s decision not to recommend enforcement under Section 5 of the Securities Act or Section 12(g) of the Exchange Act.
The relief covers tokens minted programmatically by Super Validators, Validators and application providers under the submitted arrangements. It does not grant blanket approval to every transaction involving Canton Coin.
The response expressly limits its position to enforcement recommendations based on Canton’s representations. Different operating conditions could lead the division to reconsider its treatment.
SEC’s new crypto guidance explains decentralized network control
The Canton Coin letter arrived one day after the regulator updated its guidance on decentralized governance and cryptocurrency classification.
On November 2, the SEC’s Division of Corporation Finance added three questions to its crypto asset FAQs, explaining how network functionality, governance and centralized control affect digital commodity classifications.
As crypto.news previously reported on the guidance, the SEC distinguished networks that can perform their intended functions from those operating without centralized control.
The updated answers explain that participation in a foundation or other governance organization does not automatically establish centralized control.
However, the staff considers whether any person or organization can determine who accesses the network, controls validators or changes its operating rules.
Its March 17 interpretation had already established categories covering digital commodities, collectibles, digital tools, stablecoins and digital securities.
Canton’s application relied on this framework, particularly the treatment of network tokens whose value comes from programmatic operations.
The development drew attention from Andreessen Horowitz partner Miles Jennings, who welcomed the SEC’s position on X.
“Incredible. @CantonNetwork just received no action relief from the SEC for its network token,” Jennings wrote.
He argued that the March token taxonomy and subsequent FAQs had created a clearer regulatory pathway for network tokens. His assessment went beyond the individual relief granted in Canton’s letter.
Canton Network’s institutional partners expand tokenization activity
Canton’s regulatory development follows several institutional projects involving banks, financial market infrastructure providers and investment firms.
On October 28, the Depository Trust & Clearing Corporation launched its tokenization service, initially integrating Canton Network and its private Besu blockchain.
The service lets eligible institutions create tokenized representations of securities held at DTC while retaining existing ownership rights and investor protections.
Twenty financial institutions signed access agreements, including JPMorgan, Bank of America, Fidelity Investments, Morgan Stanley and State Street.
Earlier, Swiss lender AMINA became the first FINMA-regulated bank to offer Canton Coin custody and trading services in May.
Its offering gives institutional customers regulated access to the token through the bank’s existing financial services platform.
Meanwhile, Digital Asset raised $355 million in June through a funding round led by a16z crypto. Investors included Citadel Securities, HSBC, BNP Paribas and Coinbase Ventures.
The financing supported Digital Asset’s plans to develop Canton infrastructure for tokenization, collateral management and settlement.
Institutional investment products have been developing alongside these projects. In May, Bitwise launched a Canton exchange-traded product on Deutsche Börse Xetra.
Trading under BWCC, the European product tracks Canton Coin through Kaiko’s reference rate and carries an annual expense ratio of 0.85%.
In the United States, 21Shares introduced an investment product providing direct exposure to CC during the same month.
