Goldman, Microsoft, Cboe and others team up to launch Blockchain Network
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(Bloomberg) — A group of firms including Goldman Sachs Group Inc, Microsoft Corp, Deloitte and Cboe Global Markets Inc are joining a new blockchain system that aims to connect disparate institutional applications, potentially encouraging wider use of distributed ledger technology in the financial markets.
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Participants in the Canton Network, which will begin testing some features in July, say the system offers better privacy and controls than currently available. At the same time, it will achieve a scale and standard suitable for financial institutions, according to a statement released by the companies on Tuesday.
Other firms participating include Digital Asset, ASX, BNP Paribas, Broadridge, Deutsche Börse Group, Cumberland, Moody’s, Paxos and SBI Digital Asset Holdings. The network will tie together blockchain apps created using Daml – a smart contract language created by Digital Asset, the blockchain startup formerly led by former JPMorgan CEO Blythe Masters and backed by some of the world’s largest financial institutions.
Banks and other large companies have been developing and testing blockchain applications for years in the hope that they can simplify and speed up some of their most complex processes.
Part of the effort has involved exploring ways to transform traditional securities, such as stocks and bonds, into tokens on a blockchain. Others have focused on speeding up trade and settlement of various assets, or facilitating international payments. While various systems have been tested and some applications have gone live, such blockchain networks have yet to be adopted on a large scale.
Part of what’s holding the existing applications back is their inability to connect different blockchain systems built by different organizations while allowing creators to retain the controls and privacy required in regulated financial markets, network advocates said. As a so-called “network of networks”, Canton claims it can overcome this by allowing the systems to work together without the devices running them having to relinquish control.
This could also enable firms to connect systems that are separate in today’s market – such as asset registers and cash payment systems, the statement said.
Increasing range
Currently, Canton can connect existing applications built using Daml — such as Goldman’s Digital Asset Platform, a system for issuing assets on the blockchain — with Deutsche Börse Group’s D7 post-trade platform, the statement said. The network’s reach should grow as more applications are built using this coding language.
Systems like Canton are “a key building block for future digital and distributed financial market infrastructures,” according to Jens Hachmeister, head of issuer services and emerging digital markets at Deutsche Börse Group.
While the initiative has received support from around 30 firms, there have been several financial blockchain consortia with high-profile participants over the years. Their level of success has varied.
Large blockchain projects in finance are complex: new technology must be deployed across a range of firms operating in regulated markets. The complexity has in some cases led to projects being delayed, put on hold or scrapped. Most notably in November, Australia’s main exchange operator ASX announced it was reconsidering plans to replace its settlement and clearing platform with a blockchain-based system it had planned to build in partnership with Digital Asset.
–With help from Emily Nicolle.
(Updates detailing the network throughout.)
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