Digital Asset’s blockchain network Canton has completed a pilot involving a large group of major investment banks and asset managers demonstrating interoperability of independent distributed ledger applications (dApps) in the capital markets domain.
The blockchain pilot for tokenised real-world assets included 155 participants from 45 major organisations demonstrating settlement across 22 permissioned blockchains connected on Canton while “maintaining the controls demanded for regulated capital markets”.
Institutions with blockchain applications in production include Goldman Sachs, BNP Paribas, DTCC, Northern Trust, Standard Chartered, State Street, BNY Mellon, Broadridge, EquiLend, and Paxos.
The pilot included the successful execution of over 350 simulated transactions, proving how a network of interoperable applications can connect to enable secure, atomic transactions across multiple parts of the capital markets value chain. Digital Asset also said the pilot demonstrated the potential benefits of using such a network to reduce counterparty and settlement risk, optimise capital, and enable intraday margin cycles.
Speaking at a demonstration of the Canton network today, Kelly Mathieson, chief business development officer at Digital Asset, said: “Getting to this native level of interoperability is key. We showed a lot of interesting things in the pilot, but that was the one that really surprised people the most – that you could natively interoperate, but yet still preserve privacy. It’s having that interoperability while preserving the privacy and control.”
The pilot program provided participants with distributed ledger applications for asset tokenisation, digital cash, fund registry, 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,” Digital Asset said in a statement.
The pilot brought together firms from every side of the market: 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 tokenised securities, money market funds, and deposits across applications.
Digital Asset revealed the Canton Network in May 2023, labelling it the industry’s first privacy-enabled interoperable blockchain network designed for institutional assets. By creating a ‘network of networks’, Canton will allow previously siloed systems in financial markets to interoperate with the appropriate governance, privacy, permissioning and controls required for highly regulated industries.
Mathieson added that the network enables a level of atomicity that will greatly reduce risk in the market. “This essentially means that if it’s a complex transaction, all of the legs of that transaction will go through together – or none of them will go through. Atomicity means you don’t have the broken legs and broken ledgers and thus the need for reconciliation in the non-Canton systems. It’s key that you get that interoperable application with atomicity, with the guarantees of privacy and control when you are using Daml and Canton.”
The latest pilot has shown how the Network can reduce costs, risks, and inefficiencies, while striving to meet regulatory requirements for the issuance, transfer, and settlement of tokenised traditional assets.
“The pilot program marks an important milestone for the Canton Network,” said Yuval Rooz, CEO and co-founder of Digital Asset. “Canton allows previously siloed financial systems to connect and synchronise 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.”