Canton Networks offers glimpse of regulated finance on blockchain
Leading firms join a new network of networks, but crypto natives see just another walled garden.
Even as a low-level legal war breaks out between US regulators and crypto companies – with the SEC alleging much of crypto constitutes unregistered securities while some big crypto exchanges countersue and threaten to quit the US – regulated financial institutions continue to invest in blockchain.
On May 9, BNP Paribas and Goldman Sachs emerged as partners in Canton Network, a new consortium also including the Cboe, Deutsche Börse, an array of blockchain companies, such as Digital Asset, leading technology companies, including Microsoft, as well as venture capital investors.
The aim is to address the familiar problem of interoperability. Innovators have built, somewhat haphazardly, a whole series of potentially useful pieces of blockchain kit. But unless they all connect, they achieve next to nothing.
The Canton Network says it will provide a decentralized infrastructure that connects independent applications built with Daml, Digital Asset’s smart-contract language, to create a ‘network of networks’, allowing previously siloed systems to interoperate with the appropriate governance, privacy, permissioning and other controls required for highly regulated industries.
There is a trade off in all efforts to put conventional finance on blockchain between the drive for scale on open public blockchains and the need to maintain control inside banks’ own private permissioned blockchains that comply with real-world regulation.