On October 28, CFTC Chairman Michael Selig delivered remarks at the agency’s inaugural Frontier Forum, outlining his views on super intelligence, also known as artificial intelligence, and financial markets. Selig said the technology could improve risk management and information access while giving smaller participants better access to the market. He identified registration, liability, and customer-identification questions raised by autonomous trading agents, and he stated that regulation should focus on “the functions performed, the control exercised, and the economic realities of the transaction.” Selig also flagged risks from unexpected agent behavior and concerns with policing autonomous agents, while noting that CFTC staff already use the technology to help police markets. Finally, he highlighted potential demand for derivatives to hedge computational resource costs and availability and noted that the agency’s request for comment on compute derivatives had drawn more than 100 responses.
On November 2, the SEC Division of Corporation Finance updated its crypto-asset FAQs by adding Questions 1.4, 1.5, and 1.6 on governance, market participation, and decentralization. Question 1.4 finds that broad-based governance participants generally are not a group for purposes of the “central party” definition if they are unaffiliated and have no separate agreement or understanding. Question 1.5 explains that overseeing participation includes controlling system access or validator eligibility, but it generally excludes automatic rules-based operation or discretion exercised solely through qualifying broad-based governance. Question 1.6 distinguishes functionality, which concerns a native asset’s programmatic utility, from decentralization, which concerns autonomous operation without operational, economic, or voting control by a person or group. The FAQs represent staff views, have no legal force or effect, and do not create new obligations.
On November 3, the SEC Division of Corporation Finance (“Division”) issued a no-action response addressing Canton Coin’s classification and programmatic minting. Relying on the requester’s representations, the Division determined that Canton Coin is a “digital commodity” under the SEC’s crypto-asset interpretation. The Division pointed to the token’s value coming from the Canton Network’s programmatic operation and supply-and-demand dynamics, rather than profits from others’ managerial efforts, and that the network has no “central party.” The Division determined that it would not recommend enforcement action if Canton Coin is minted as described without registration under Section 5 of the Securities Act or Section 12(g) of the Securities and Exchange Act.