The US Securities and Exchange Commission’s Division of Corporation Finance said it views Canton Coin, the Canton Network’s native token, as a “digital commodity” and that staff will not recommend enforcement action if validators and application providers mint the token programmatically without registering it.
Canton’s lawyers’ request letter was dated Oct. 30, and SEC staff responded four days later. Staff cited two representations from the lawyers: that Canton Coin derives its value from the network’s programmatic operation and from supply and demand rather than from the managerial efforts of others, and that the network has no central party.
The relief comes a week after the Depository Trust & Clearing Corporation launched a tokenisation service running on Canton and its own private network, allowing firms to convert DTC-held stocks and Treasuries into tokens. Morgan Stanley said Tuesday that it is among the first banks to use that service.
Canton Coin launched without an initial coin offering or premine, according to a statement from Canton, and tokens were initially earned only by running network infrastructure and applications.
The CEO of Digital Asset, which created the Canton Network, said: “Financial institutions need confidence in both the technology they use and the economic model that supports it.”
The SEC’s letter carries limits: it reflects only staff’s position on enforcement, not a legal conclusion, and rests on the facts Canton presented, the agency noted.
Canton said the letter is the first relief of its kind since the SEC published its March interpretive release, and the first since the agency’s August proposal. The Clarity Act stalled in the Senate in September.
SEC Chair Paul Atkins said in July the agency would act if Congress did not, and the SEC recently proposed rules on broker-dealer custody of digital assets. Digital Asset itself raised capital earlier this year from Wall Street firms and a sovereign wealth fund.
Analysis
Why This Matters
- The SEC staff letter gives financial institutions regulatory clarity to use Canton Coin in tokenised asset services, potentially accelerating Wall Street adoption of blockchain-based settlement.
- It is the first enforcement relief under the SEC’s March framework, setting a possible precedent for other blockchain tokens that can demonstrate decentralised network operation.
- The decision comes as Congress has stalled on crypto legislation, leaving the SEC to shape policy through staff no-action letters and proposed rulemaking.
Background
Canton Network is a blockchain designed for institutional finance, created by Digital Asset. In October, the Depository Trust & Clearing Corporation launched a tokenisation service on the network, letting firms convert securities into tokens. The SEC’s March 2025 interpretive release stated that some digital assets may be commodities rather than securities, depending on their structure. The Clarity Act, which would have codified such distinctions, failed to pass the Senate in September. SEC Chair Paul Atkins has said the agency would act on crypto rules without congressional action.
What to Watch
- Whether other blockchain projects seek similar SEC staff letters and whether the agency applies consistent reasoning.
- The SEC’s ongoing rulemaking on broker-dealer custody of digital assets, which could affect how institutions hold and transfer tokens.
- Potential reintroduction of the Clarity Act or other crypto legislation in the next Congress.
Checked
12 claims in this story checked against 1 source: 10 supported.
Show each claim
- SupportedSEC staff views Canton Coin as a digital commodity.Decrypt: “The SEC’s Division of Corporation Finance said it views Canton Coin as a “digital commodity””
- SupportedCanton says the letter is the first relief of its kind since the SEC’s March interpretive release.Decrypt: “Canton said the letter is the first relief of its kind since the SEC published its March interpretive release”
- SupportedSEC staff will not recommend enforcement action if validators and application providers mint the token programmatically without registering it.Decrypt: “Agency staff also said they won’t recommend enforcement action if Canton’s validators and application providers mint the token programmatically without registering it.”
- SupportedStaff cited the lawyers’ representation that the token derives value from network operation and supply and demand, rather than others’ managerial efforts.Decrypt: “The first is that the token derives its value from the network’s programmatic operation and from supply and demand, rather than from the managerial efforts of others.”
- SupportedStaff cited the lawyers’ representation that the network has no central party.Decrypt: “The second is that the network has no “central party.””
- SupportedCanton’s request letter was dated Oct. 30, and staff responded four days later.Decrypt: “Canton’s request letter was dated Oct. 30, four days before staff responded.”
- SupportedThe DTCC tokenisation service launched a week earlier, runs on Canton and DTCC’s private network, and lets firms convert DTC-held stocks and Treasuries into tokens.Decrypt: “The relief comes a week after the Depository Trust & Clearing Corp. launched a tokenization service that runs on Canton and DTCC’s own private network, letting firms convert DTC-held stocks and Treasuries into tokens.”
- SupportedMorgan Stanley said Tuesday it was among the first banks to use the service.Decrypt: “The relief follows DTCC’s launch of a tokenization service on Canton, which Morgan Stanley says it’s among the first banks to use.”
- SupportedThe Digital Asset CEO said: “Financial institutions need confidence in both the technology they use and the economic model that supports it.”Decrypt: ““Financial institutions need confidence in both the technology they use and the economic model that supports it,” , CEO of Digital Asset, which created the Canton Network.”
- SupportedThe letter reflects only staff’s enforcement position, not a legal conclusion, and rests on the facts Canton presented.Decrypt: “The letter has limits, though, as it reflects only staff’s position on enforcement, not a legal conclusion, and rests on the facts Canton presented, the SEC noted.”
- Not in the sourcesSEC Chair Paul Atkins said in July that the agency would act if Congress did not.Decrypt: “SEC Chair Paul Atkins said in July if Congress didn’t,”
- Partly supportedThe SEC recently proposed rules on broker-dealer custody of digital assets.Decrypt: “the SEC recently proposed rules on .”
