Normal coactions extend to the C*-envelope

We show that a normal coaction of a discrete group on an operator algebra extends to a normal coaction on the C*-envelope. This resolves an open problem attempted by several experts in the area, and provides a more direct proof of a prominent result of Sehnem. As an application, we resolve a question of X. Li, where we identify the C*-envelopes of the operator algebras of groupoid-embeddable categories and of cancellative right LCM monoids. This latter class includes many examples of monoids that are not group-embeddable.