Blockchain interoperability comes to institutions with the launch of the Canton Network
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(Kitco News) – Digital Asset, a fintech company that helps businesses create interconnected ecosystems, has partnered with several firms to launch the Canton Network, a privacy-enabled interoperable blockchain network designed for institutional assets.
According to the press release announcing the project, a conglomerate of companies has teamed up with Digital Asset to launch the new network, designed to provide a decentralized infrastructure that connects independent applications built with Daml, Digital Asset’s smart contract language.
“The Canton Network vision strives to enable seamless connectivity across various blockchain networks in the industry,” said Jens Hachmeister, Head of Issuer Services and Emerging Digital Markets at Deutsche Börse Group. “Such solutions are an important building block for future digital and distributed financial market infrastructures.”
Included in the list of Canton Network participants are BNP Paribas, Cboe Global Markets, Cumberland, Deloitte, Deutsche Börse Group, The Digital Dollar Project, EquiLend, Goldman Sachs, Microsoft, Moody’s, Paxos, S&P Global and SBI Digital Asset Holdings, among others others.
“The Canton Network’s design overcomes the shortcomings of existing smart contract blockchain networks and enables previously closed systems in finance to become interoperable and synchronized in ways that had been impossible before,” the release said. “Canton Network offers the privacy and controls required for highly regulated organizations, creating a safe and secure environment where assets, data and cash can move freely across applications in real-time, unlocking new efficiencies and driving innovation.”
The goal of the Canton Network is to help create opportunities for financial institutions to offer new innovative products to their customers while improving their efficiency and risk management.
“Canton Network is a powerful response to the industry’s demand for a solution that leverages the potential of blockchain while preserving fundamental privacy requirements for institutional finance,” said Chris Zuehlke, partner at DRW and global head of Cumberland. “This unique approach, combined with the ability to perform an atomic transaction across multiple smart contracts, is the building block needed to chain these workflows.”
An example could be a transaction between an asset register and a cash payment system. With the Canton Network, a digital bond and a digital payment can be assembled across two separate applications into a single atomic transaction, guaranteeing simultaneous exchange without operational risk. The system will also make it possible to use a digital asset in a financial transaction with security through a link to a repo or loan application.
According to Digital Asset, blockchain and smart contracts have not achieved meaningful adoption among financial institutions due to three major shortcomings: “The lack of privacy and control over data; other blockchains have had to accept trade-offs between control and interoperability; and inability to scale.”
The Canton Network was designed to overcome these shortcomings by “uniquely balancing the decentralization of a network with the privacy and control essential to operating within a safe and sound regulatory environment,” the release said. “Only the Canton Network enables participants to secure permissions, exposure and interactions across the network, to comply with security, regulatory and legal requirements.”
“For the first time, financial institutions can realize the full benefits of a global blockchain network while operating within the regulatory railings that ensure a safe, sound and fair financial system,” said Yuval Rooz, co-founder and CEO of Digital Asset. “This is a significant step forward for the blockchain space.”
The new network is already able to connect to several private blockchain solutions – including Deutsche Börse Group’s D7 post-trade platform and Goldman Sachs’ GS DAP – while maintaining privacy and permissions, and the number of connected chains will continue to grow after as more Daml-built applications are put into production.
“Sharing real-time data updates across the insurance value chain, while safeguarding sensitive information and ensuring scalability to accommodate a rapidly growing digital marketplace, is critical to success,” said Michele Trogni, Zinnia CEO and Eldridge Operating Partner. “Canton Networks’ ability to facilitate powerful connections across the value chain is a critical enabler for us, and we are excited about the potential benefits.”
Canton Network participants will begin testing its interoperability across a variety of applications and use cases in July.
Disclaimer: The views expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for any loss and/or damage arising from the use of this publication.
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