The “Who’s Who” of Tech and Finance Join Forces in Blockchain Collaboration
A new partnership between financial giants, tech behemoths, media monsters, and leaders in digitization just announced plans to launch what they call Canton. What is Canton? In a press release dated May 9, The Canton Network says it is “the industry’s first privacy-enabled interoperable blockchain network designed for institutional assets and built to responsibly unlock the potential of synchronized financial markets.” What does that mean? We’ll take it one piece at a time below.
The announcement describes the Canton Network as building toward being an interoperable blockchain with privacy features designed for the institutional asset management industry. It aims to allow “previously siloed” financial assets to be able to synchronize, making it possible to interconnect diverse financial markets.
The list of partners is a “Who’s Who” list of companies that are considered among the best in their individual specialties.
Canton Participants include, in alphabetical order:
3Homes, ASX, BNP Paribas, Broadridge, Capgemini, Cboe Global Markets, Cumberland, Deloitte, Deutsche Börse Group, Digital Asset, The Digital Dollar Project, DRW, Eleox, EquiLend, FinClear, Gambyl, Goldman Sachs, IntellectEU, Liberty City Ventures, Microsoft, Moody’s, Paxos, Right Pedal LendOS, S&P Global, SBI Digital Asset Holdings, Umbrage, Versana, VERT Capital, Xpansiv, and Zinnia.
The announcement proclaims that The Canton Network will provide “a decentralized infrastructure that connects independent applications built with Daml, Digital Asset’s smart-contract language.” The result will be “a ‘network of networks’, allowing previously siloed systems in financial markets to interoperate with the appropriate governance, privacy, permissioning and controls required for highly regulated industries.”
The Canton Network intends to enable financial institutions to experience a safer and reconciliation-free environment where assets, data, and cash can synchronize freely across applications. The end product will be opportunities for financial institutions to offer new innovative products to their clients while enhancing their efficiency and risk management.
An example provided by Canton is asset registers and cash payment systems which are distinct and siloed systems in today’s markets. With the new Canton Network, a digital bond and a digital payment can be composed across two separate applications into a single transaction, guaranteeing simultaneous exchange without operational risk. Similarly, a digital asset could be used in a collateralized financial transaction via connection to a repo or leveraged loan application.
Bloomberg calls the new venture “a collaborative effort that could be crucial to ledger technology in the finance market.” In addition, the group is striving to integrate “disparate institution applications,” which could have a positive impact on the entire industry.
The press release expalained that until Canton, smart contract blockchain networks have not achieved meaningful adoption among financial institutions and other enterprises because of three significant shortfalls:
- The lack of privacy and control over data: other chains have shortcomings around privacy that prevent the use of the technology by multiple regulated participants on the same network. There are currently no other blockchains that can offer data protection or control at any layer of its network.
- Other blockchains have had to accept trade-offs between control and interoperability: other chains require operators to forfeit their full control of applications by using a shared pool of validators to gain interoperability.
- The inability to scale: with applications competing for global network resources and the inherent capacity limitations caused by how public blockchains operate, achieving the scale and performance financial institutions need remains challenging.
The Canton Network expects to remove these obstacles by balancing the decentralization of a network with the privacy and controls needed to operate within a sound regulatory environment.
The network expects to raise the bar on safety and soundness in blockchain financial interactions by enabling network users to safeguard permissions, exposure, and interactions across Canton, to comply with security, regulatory and legal requirements.
The network can connect innovative blockchain solutions in market today, such as Deutsche Börse Group’s D7 post-trade platform and Goldman Sachs’ GS DAP™, while retaining privacy and permissioning. As more Daml-built applications go into production this year and beyond, the number of connections on the Canton Network are expected to grow exponentially. For example, one application’s monthly notional traded exceeds the most active crypto token volumes.
Canton Network participants will begin testing interoperability capabilities across a range of applications and use cases in July.
The network will bring together blockchain applications built with Daml, the smart-contract language devised by Digital Asset. The team-up is the result of years of blockchain research and development by the tech and finance industry’s giants that are involved.
Managing Editor, Channelchek