Several prominent financial institutions on Wall Street, including Goldman Sachs, BNY Mellon, and Cboe Global Markets, have recently completed an extensive pilot test utilizing blockchain technology on the Canton Network.

The conclusion of a series of successful pilot tests on the Canton Network marks a significant milestone in leveraging blockchain technology within capital markets on a large scale.

Successful Completion of Blockchain Pilot Test by Wall Street Entities

After nearly a year since its establishment, the Canton Network, a blockchain platform spearheaded by major financial players like Goldman Sachs and BNY Mellon, has undergone comprehensive testing. Launched in May the previous year, the network had its testing phase scheduled for July 2023, which has now been successfully initiated. At its inception, Microsoft and Deloitte were reported as key partners involved in the network.

As reported by Bloomberg on March 12, the recent testing phase represents a noteworthy experiment in the financial sector, showcasing substantial advancements in blockchain interoperability. The testing involved 155 participants from 45 renowned organizations, demonstrating successful settlements across 22 permissioned blockchains connected to the network’s ledger.

The extensive trial period spanned four days, incorporating interactions with 22 decentralized applications (dApps). Institutional investors engaged in over 350 simulated transactions utilizing distributed ledger technology (DLT) in various domains such as tokenized assets, fund registries, digital cash, repo, securities lending, and margin management.

Eric Saraniecki, the co-founder and head of strategic initiatives at Digital Asset, emphasized the importance of this achievement, noting the successful operation of multiple applications in synchronized transactions on the blockchain network.

The pilot program involved a diverse group of market participants, including 15 asset managers, 13 banks, four custodians, three exchanges, and the stablecoin issuer Paxos Trust Co. Notable participants encompassed Abrdn, BNP Paribas, DTCC, DRW, IEX, Nomura, Northern Trust, Standard Chartered, State Street, Visa Inc., and Wellington Management.

The primary goals of these tests were to explore potential advantages such as mitigating counterparty and settlement risks, as well as optimizing capital utilization within the blockchain ecosystem.

Successful Completion of Pilot Tests by Canton Network Reflects Increasing Institutional Interest in Blockchain Technology

The Canton Network, designed as a privacy-enabled interoperable blockchain network tailored for institutional investors, facilitates seamless real-time transfer of regulated assets, data, and cash among financial institutions. A press release from Canton elaborated on the network’s capabilities, emphasizing its capacity to orchestrate complex transactions with minimal operational risks.

Significantly, the platform enables the creation of digital bonds and payments across various applications, ensuring simultaneous exchanges without exposure to operational vulnerabilities. Furthermore, digital assets can be utilized in collateralized financial transactions by interfacing with repo or leveraged loan applications.

The successful implementation of these tests indicates a rising momentum among traditional financial institutions towards adopting blockchain technology after a decade of exploration and experimentation.

The entry of traditional financial giants like BlackRock and Fidelity into the space, with the launch of spot bitcoin ETFs in January, has further validated blockchain and cryptocurrencies. These new financial instruments have collectively generated over $100 billion in trading volume, fostering increased acceptance and adoption within the financial sector.

Since its launch last year, the Canton Network has attracted significant industry attention, with participation from a diverse range of firms including BNP Paribas, Broadridge, Cumberland, Deutsche Börse Group, DRW, Liberty City Ventures, Paxos, Right Pedal LendOS, S&P Global, SBI Digital Asset Holdings, Umbrage, Versana, VERT Capital, Xpansiv, and Zinnia.

According to Saraniecki, the architecture of the Canton network enables seamless connectivity among various blockchain systems while ensuring privacy and control for each participating entity. He likened each blockchain application to a “website,” with the network acting as “the internet,” facilitating simultaneous updates across all applications accessible only to permissioned users.

Despite the use of simulated transactions in the pilot program, Saraniecki confirmed that no regulatory alterations are necessary to integrate assets into the Canton Network. Notably, Goldman Sachs has utilized the network to construct its digital asset platform, employing the Daml coding language.