Wall Street Whales Test Blockchain Waters: Goldman Sachs, BNY Mellon in Pilot

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Major Wall Street whales, including Goldman Sachs, BNY Mellon, and Cboe Global Markets, have successfully concluded a large-scale pilot test utilizing blockchain technology on the Canton Network.

The series of pilot tests successfully concluded on the Canton Network makes it one of the largest-scale experiments utilizing blockchain technology in capital markets.

Wall Street Whales Successfully Complete Blockchain Pilot Test

Nearly a year after its launch, the Canton Network, a blockchain network spearheaded by leading financial institutions such as Goldman Sachs and BNY Mellon, has undergone a series of tests. The network was launched in May last year, with testing slated for July 2023. It has now commenced its testing phase. At the time of the network’s inception, Microsoft and Deloitte were reported to be participating partners.

According to a report by Bloomberg on March 12, this recent testing phase represents one of the most comprehensive experiments in the financial industry. The firm revealed significant strides in its blockchain interoperability, with 155 participants from 45 prominent organizations showcasing successful settlements across 22 permissioned blockchains linked to its ledger. 

The firm outlined the extensive trial period, which lasted four days and included the opportunity to engage with 22 decentralized applications (dApps). Institutional investors participated in over 350 simulated transactions using distributed ledger technology (DLT) in various areas, such as tokenized assets, fund registries, digital cash, repo, securities lending, and margin management. 

Eric Saraniecki, co-founder and head of strategic initiatives at Digital Asset, highlighted the significance of this milestone, stating that it was the successful demonstration of multiple applications operating in synchronized transactions on the blockchain network.

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

The primary objectives of these tests were to explore potential benefits such as reducing counterparty and settlement risks and optimizing capital utilization within the blockchain ecosystem.

Canton Network Successfully Completes Pilot Tests, Highlighting Growing Institutional Interest in Blockchain

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

Notably, the platform allows for the composition of digital bonds and payments across distinct applications, ensuring simultaneous exchange without exposure to potential operational pitfalls. Additionally, digital assets can be leveraged in collateralized financial transactions by interfacing with repo or leveraged loan applications.

The successful execution of these tests signifies a “growing momentum” among traditional financial institutions toward embracing blockchain technology following a decade of experimentation and exploration. 

The emergence of traditional financial firms like BlackRock and Fidelity, which launched spot bitcoin ETFs in January, has further legitimized blockchain and cryptocurrencies. These new financial instruments have collectively garnered over $100 billion in trading volume, increasing acceptance and adoption within the financial industry.

Upon its launch last year, Canton Network garnered widespread industry interest, with participation from a diverse array 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 Canton network’s architecture enables seamless connectivity between various blockchain systems while ensuring privacy and control for each participating entity. He likened each blockchain application to a “website,” with the network serving as “the internet,” facilitating simultaneous updates across all applications accessible only to permissioned users.

While the pilot utilized simulated transactions, Saraniecki asserted that no regulatory changes are required to integrate assets into the Canton Network. Notably, Goldman Sachs has leveraged the network to build its digital asset platform, utilizing the Daml coding language.

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