SEC Canton Coin No-Action Letter
Staff at the US Securities and Exchange Commission (SEC) said yesterday they will not recommend enforcement action over the programmatic minting of Canton Coin, which they treat as a digital commodity. A digital commodity is a crypto asset treated as not a security, and programmatic minting means tokens are created automatically by network rules. The SEC Division of Corporation Finance (Corp Fin) published its response to a letter dated Friday 30 October. Jonathan A. Ingram, Deputy Chief Counsel, Office of Chief Counsel, Corp Fin, signed the response.
The response is a no-action letter, meaning staff say they will not recommend enforcement. It covers minting by Super Validators, Validators and application providers, the network participants named in the request, without registration under Section 5 of the Securities Act or Section 12(g) of the Exchange Act, the two registration requirements at issue. The staff wrote:
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.
SEC Division of Corporation Finance
The digital commodity label comes from the SEC’s crypto asset Interpretation. The staff’s reasoning rests on two representations.
| Representation | What the staff relied on |
|---|---|
| Source of value | Value derives from programmatic network operation and from supply and demand, not from the managerial efforts of others |
| Central party | The network has no central party as the Interpretation defines it |
Each is a statement of fact about the network, so the position is only as good as those facts. The staff say the response expresses the Division’s position on enforcement action only and does not express any legal conclusion on the issues presented. They add that different facts or conditions might require different conclusions. The letter carries no effective date or expiry.
Miles Jennings, a partner at a16z, said in a post on X that the SEC’s token taxonomy and follow-up FAQs have created a clear pathway out of securities laws for network tokens, which he called digital commodities. Canton Network is a blockchain protocol developed by Digital Asset.
Our reading: exchanges, brokers and custodians that list or hold Canton Coin gain staff comfort on the minting, which can feed their own securities-law risk assessments. The letter does not cover other tokens or the platforms that trade this one, and it is not an exchange-traded product approval. Whether the same two representations hold for other network tokens would depend on their own facts.
Sources: SEC Division of Corporation Finance, Canton Coin no-action response
