No central control, no securities action? SEC gives Canton Coin relief

In a newly released staff position, the Securities and Exchange Commission’s Division of Corporation Finance clarified that Canton Coin will enter circulation under a digital commodity classification.

The agency will hold off on enforcement action related to programmatic issuance as long as certain conditions are fulfilled. The developers behind the Canton protocol, Digital Asset Holdings, requested this relief in a letter dated October 30. They based their argument on the SEC’s March 2026 crypto rules, so this new response provides a perfect case study of how those rules work in practice.

The SEC division says Canton’s value is in its programmatic operations

Digital Asset had sought an interpretation of whether Canton Coin falls within the category of digital commodities and whether minting such coins without registration under Section 5 of the Securities Act and 12(g) -1 of the Exchange Act would result in any enforcement action.

In response to Digital Asset, the SEC Division cited the network’s automated operation and supply-and-demand dynamics as the primary sources of value, rather than any profit expectations tied to third-party management. It also emphasized the decentralized nature of the network.

Canton Coin’s tokenomics also played an important role in Digital Asset’s argument. The network uses a burn-and-mint mechanism in which Canton Coins used to pay Global Synchronizer transaction fees are burned, removing them from circulation.

Meanwhile, Super Validators, Validators and application providers can earn newly minted coins as rewards for their contributions to network activity. Digital Asset argued that this model ties the token’s value to actual network usage rather than speculative investment expectations. It also highlighted that Canton Coin had no pre-mine, initial coin offering or pre-launch token sale.

On this ground, it stated that it would not recommend the Commission to take any enforcement action due to the programmatic issuance of Canton Coins by Super Validators, Validators, and application providers.

So far, Miles Jennings of a16z has endorsed the SEC staff’s stance. He commented, “Incredible.CantonNetwork just received no-action relief from the SEC for its network token. The SECGov’s token taxonomy from March and follow-up FAQs have now created a clear pathway out of securities laws—Network tokens are digital commodities.”

Other crypto community members also shared their optimism that the commission’s decision is monumental to all other network tokens. However, some shared concerns that these gains could be reversed under the next US administration.

New SEC crypto FAQs clarify decentralization and governance rules

More recently, the division also added three new entries to its crypto asset FAQ, clarifying how shared governance, control over network access, and decentralization factor into its token classification framework. The new explanations offer additional clarity on the agency’s March interpretation of federal securities laws, particularly regarding when governance participants act as a central party and what authority they hold in that capacity.

Speaking about the new entries, the a16z partner Jennings noted that they shed light on how networks can maintain decentralized governance without abandoning legal structures such as DUNAs. Additionally, Journalist Eleanor Terrett said the additions seek to answer some of the questions around decentralization that the CLARITY Act would address.

However, in response to Terrett, Avi Lev questioned whether this update helps or hurts the push for lawmakers to pass the CLARITY Act. He contended that FAQ updates carry no statutory weight and can be easily scrapped by a future administration.

The commission, in its press release, had confirmed that the FAQs have no legal weight. It wrote, “The Commission has neither approved nor disapproved their content. Like all staff guidance, these FAQs have no legal force or effect, do not alter or amend applicable law, and do not create any new or additional obligations for any person.”

Though much earlier, the commission had emphasised that the March guidance was deliberately designed to work alongside, rather than replace, ongoing congressional efforts to build a statutory market structure.

Digital Asset raised over $355 million in a funding round in June

Meanwhile, in June, the creators of the Canton Network, Digital Asset, bolstered their financial position with a $355 million funding round headed by a16z crypto. In this blockbuster transaction, there was cross-industry participation by an array of entities, including TradFi and crypto-native titans such as ABN Amro, HSBC, Optiver, and Apollo Funds.

The financing round was intended to serve as a stepping stone to Digital Asset’s next growth phase. The funds were allocated to help the company expand its product offering, increase its network membership, and onboard institutions that will develop regulated on-chain apps.