Digital Asset and market participants completed the Canton Network pilot, a first-of-its-kind program demonstrating the interoperability of twenty-two independent distributed ledger applications (dApps) in the capital markets domain.
The execution of over 350 simulated transactions proved how a network of interoperable applications can connect to enable secure, atomic transactions across multiple parts of the capital markets value chain. It also demonstrated the potential benefits of using such a network to reduce counterparty and settlement risk, optimize capital, and enable intraday margin cycles.
The pilot program provided participants with distributed ledger applications for asset tokenization, fund registry, digital cash, repo, securities lending, and margin management transactions – all with the ability to interoperate via the Canton Network TestNet. Their simulated transactions demonstrated that real-time settlement and immediate reconciliation across counterparty systems could be achieved while adhering to the regulatory asset control, security, and data privacy requirements to move assets safely.
The pilot brought together firms from every side of the market: with 15 asset managers, 13 banks, four custodians, three exchanges, and one financial market infrastructure provider participating in the simulated transactions and/or demonstrations.
Over a four-day period, participants were invited to try 22 dApps comprising five fund registries, five cash registries, three bond registries, three trading, four margin, and two financing apps, to exchange tokenized securities, money market funds, and deposits across applications. The pilot showed the potential of the Canton Network to reduce costs, risks, and inefficiencies, while striving to meet regulatory requirements for the issuance, transfer, and settlement of tokenized traditional assets.
Institutions with blockchain applications in production, including BNY Mellon, Broadridge, DRW, EquiLend and Goldman Sachs, provided market expertise for the working group throughout the program.
“The pilot program marks an important milestone for the Canton Network,” said Yuval Rooz, CEO and co-founder of Digital Asset, in a statement. “Canton allows previously siloed financial systems to connect and synchronize in previously impossible ways while abiding by the current regulatory guardrails. We’re proud to facilitate the pilot and look forward to working with the pilot participants to continue identifying additional use cases where the Canton Network can be leveraged.”
Until now, the lack of control over data and the need to sacrifice interoperability for privacy have limited firms’ ability to leverage the efficiencies that blockchain technology delivers. Canton Network’s public-permissioned structure fuses the interoperability potential of sovereign applications with the privacy controls that would be necessary to operate within a safe and sound regulatory environment. Canton preserves participant privacy when transacting across applications. Additionally, firms maintain control over their applications’ performance because transactions are validated by a data-defined set of nodes, not a universal third-party pool of validators.
Additional pilot participants included: abrdn, Baymarkets, BNP Paribas, BOK Financial, Cboe Global Markets, Commerzbank, DTCC, Fiùtur, Generali Investments, Harvest Fund Management, IEX, Nomura, Northern Trust, Pirum, Standard Chartered, State Street, Visa, and Wellington Management, with Microsoft as a supporting partner.