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 joined with multiple 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 have joined forces 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 & New Digital Markets at Deutsche Börse Group. “Such solutions are a key 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.
“The Canton Network’s design overcomes the shortfalls of existing smart-contract blockchain networks and enables previously siloed systems in finance to become interoperable and synchronized in ways that had been impossible before,” the release said. “Offering the privacy and controls required for highly regulated organizations, the Canton Network creates a safe and sound environment in which assets, data, and cash can move freely across applications in real-time, unlocking new efficiencies and powering innovation.”
The goal of the Canton Network is to help create opportunities for financial institutions to offer new innovative products to their clients while enhancing their efficiency and risk management.
“The Canton Network is a powerful answer to industry calls for a solution that harnesses 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, coupled with the ability to execute an atomic transaction across multiple smart contracts, is the building block needed to bring these workflows on chain.”
An example would 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 composed across two separate applications into a single atomic transaction, guaranteeing simultaneous exchange without operational risk. The system would also enable a digital asset to be used in a collateralized financial transaction through a connection to a repo or leveraged loan application.
According to Digital Asset, blockchain and smart contracts have not achieved meaningful adoption among financial institutions due to three major shortfalls: “The lack of privacy and control over data; other blockchains have had to accept trade-offs between control and interoperability; and the inability to scale.”
The Canton Network was designed to overcome these shortfalls by “uniquely balancing the decentralization of a network with privacy and control essential to operating within a safe and sound regulatory environment,” the release said. “Only the Canton Network enables participants to safeguard 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 guardrails that ensure a safe, sound, and fair financial system,” said Yuval Rooz, co-founder and CEO at Digital Asset. “This is a significant step forward for the blockchain space.”
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The new network is already able to connect with multiple private blockchain solutions – including Deutsche Börse Group’s D7 post-trade platform and Goldman Sachs’ GS DAP – while retaining privacy and permissioning, and the number of connected chains will continue to grow as more Daml-built applications go into production.
"Sharing real-time data updates across the insurance value chain, while safeguarding sensitive information and ensuring scalability to accommodate a fast-growing digital marketplace, is essential for success,” said Michele Trogni, chief executive officer of Zinnia and operating partner at Eldridge. “The Canton Network's capacity to facilitate powerful connections across the value chain is a critical factor for us, and we are excited about its potential benefits."
Participants in the Canton Network will begin testing its interoperability capabilities across a range of applications and use cases in July.