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Privacy-Enabled Canton Network Boasts Big-Name Institutional Players

Digital Asset’s “network of networks” allows normally siloed financial systems and institutional assets to interact and synchronize in previously impossible ways. Participants include BNP Paribas, Goldman Sachs, Cboe Global Markets, Microsoft and many others.

Financial technology company Digital Asset and a group of leading participants in the financial industry announced plans for the launch of the Canton Network in a press release earlier this week. Described as the industry’s first privacy-enabled interoperable blockchain network, Canton Network is designed to “responsibly unlock the potential of synchronized financial markets.”

The decentralized infrastructure will connect individual applications built using Digital Asset’s Daml smart-contract language. This will enable previously siloed systems to interact, creating a ‘network of networks’ through which assets, data and cash can freely synchronize, utilizing governance, privacy and permissioning controls suitable for highly regulated financial institutions.

For example, a digital bond and a digital payment, traditionally held in distinct and isolated infrastructures, could be merged via two separate Canton Network applications into a single atomic transaction to guarantee real-time exchange and settlement.

With Canton Network, Digital Asset aims to address what it describes as three shortfalls of current public blockchains which have so far disincentivized adoption among financial institutions:

1/ Lack of privacy and control over data - Having a permanent record of past transactions is considered one of the strengths of blockchain technology. But the data protection laws which regulated companies must adhere to are often not compatible with such an open system.

2/ Trade-offs between control and interoperability - In order to achieve interoperability users must use a shared validator pool, thus giving up full control over their applications.

3/ Inability to scale - Financial institutions require scaling and performance which are difficult to achieve with multiple applications competing for the network resources of public blockchains.

By addressing these issues and balancing decentralization against privacy and control, Canton Network enables participants to fully comply with security, regulatory and legal requirements.

Chris Zuehlke, partner at trading firm DRW and global head of its crypto subsidiary, Cumberland, had this to say:

“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. 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."

Other participants already using Canton include BNP Paribas, Deutsche Börse Group and Goldman Sachs. Interoperability testing across Daml applications will being in July, alongside industry partners such as Capgemini, Deloitte and Microsoft.

As Observers reported in December, Digital Asset was previously in partnership with the Australian Securities Exchange to implement a blockchain-based upgrade to its Clearing House Electronic Subregister System (CHESS). However, the project was abruptly canceled following an independent review, citing “significant technology, governance and delivery challenges” that needed to be addressed.”

It looks like with the Canton Network, the company has overcome all such challenges. As ever, we shall continue to Observe.