Good morning. Welcome. Thank you all for joining for the Q3 Canton Network Ecosystem webinar. Hopefully, you have all seen our report that we published last week, and we look forward to the discussion today. Without further ado, I will turn it over to Mark Toomey.
Thanks, everybody. Thanks, Mark. Mark Toomey, President of Canton Strategic Holdings. I am going to do a quick recap of our report and go through some slides. We will go to slide two right now. Institutional adoption. Institutional participation on Canton continues to strengthen as more key infrastructure goes live. We have seen many organizations positioning ahead of the important October DTCC rollout. The DTCC pilot was completed July 15, 30+ firms. Full rollout is expected in late October. Just this past month, DerivNex executed the first on-chain OTC total return swap on Canton. We have had, in Q3, six new Super Validators, a16z crypto, LSEG, Marex, Paxos, Shinhan Asset Management, and TreasurySpring.
As the network continues to grow, the new Super Validator Accountability Committee was created to ensure Super Validators stay on track to deliver on the milestones they have committed to bringing to Canton. The foundation now has over 100 members. ISLA and ISDA are notable new joiners working to establish legal and operational standards for sec lending initiatives on Canton. Initiatives that bring collateral on-chain are progressing globally. Our report highlights some notable developments in the U.K.'s government sovereign issuance program. One, the Digital Gilt Instrument pilot, AKA DIGIT, issuance is happening no later than Q1 2027. Two, the Bank of England's commitment to make DIGIT eligible as collateral in its market operations. Several Canton eco participants will play an important role in this initiative. It builds on groundwork laid by the Canton Industry Working Group from their first tokenized intraday gilt repo on Canton in January.
This working group includes LSEG, TreasurySpring, Lloyds, Archax, Euroclear, and DA, among others. Another Canton participant, HSBC Orion, won the mandate to be the platform for DIGIT issuance. Slide three. Network activity. We are seeing more apps and tokenized tools to issue assets coming onto Canton, which means more dollar liquidity coming natively on Canton to support activity. While network stats show less activity this quarter, we attribute this to continued optimization and process adjustments by applications from CIP-104 related tokenomics changes. Some takeaways from this report. Milestone trade, Virtu, Tradeweb, and M1X Global completed first of its kind repo trade on the Canton Network. This was completed fully on-chain. The collateral they used was USDM1, the digital bond issued natively on Canton by the Republic of the Marshall Islands and fully backed one for one by short-term US Treasuries.
What this shows is that native on-chain sovereign issuance can produce an instrument that works with the existing workflows. A few exciting launches and announcements for new assets on Canton this past quarter. USYC is Circle's tokenized money market fund, and USDM1, World Liberty Financial stablecoin. A suite of infrastructure solutions to support tokenization efforts also for TradFi institutions is expanding. Broadridge launched DLX, allowing banks and broker-dealers to issue and service tokenized bond and equities on Canton and plug into DTC's upcoming launch. Next slide. Iterative governance. Canton governance very focused on aligning and improving long-term economic incentives for network participants. This iterative approach to CIP-104 implementation and the pipeline of proposals will be critical for the tokenomics and governance framework.
Some takeaways from the report. Progress is being made towards the full go live of CIP-104, which will tie rewards to activity, best expressed by the amount of CC burned. Measuring verified traffic on-chain is a much more automated and accurate approach versus a legacy marker system. It closes the gap between reported activity versus real activity. Our report also highlights two very important CIPs that we've been closely monitoring. Universal Burn CIP, and very importantly, this CIP actually just passed, was approved this morning. It addresses network fees and rewards across both Global and private synchronizers, AKA subnets. Today, traffic on the Global Synchronizer burn CC and earns rewards for the apps and validators that generate it. Currently, traffic on dedicated synchronizer subnets has been paid through license fees and does not burn CC or generate CC rewards.
This new proposal sets the standard that the value of activity on all kind of synchronizers is burned, and more activity feeds the same rewards pools. It's a very important change, especially with regards to BME, burn and mint equilibrium. To recap BME, one means the network burn versus mint is at equilibrium. Below one indicates an inflationary state. Above one indicates a deflationary state. In Q3, the average BME was 569. Second CIP we've been tracking is weighted CIP voting. This CIP proposes an evolution to the Super Validator governance voting model. The goal here is to increase governance participation, and it ties voting weight to locked token balances. It builds on the long-term alignment framework that was established under CIP-105. It's important to note, weighted CIP voting is still in discussion.
The framework described is subject to change, and approval is dependent on Super Validator affirmative votes. Moving into the meat of our conversation. For most of the last year, the market has been completely focused on CLARITY . But even without that legislation, the SEC regulates securities, and the CFTC regulates derivatives. There is certainly a path toward an improved regulatory framework in the U.S. I'd like to welcome Joris Delanoue, CEO of Fairmint, as well as Mark Wendland, Chairman and CEO of Canton Strategic Holdings, to join me for a discussion on the path forward for digital asset regulations in the U.S., how the Canton Network fits within the latest regulatory framework. Mark and Joris, thanks for joining.
Thanks, Mark.
Hey, Mark. Hi, Mark.
Thanks, guys. Good to see you guys. Let's dive in. As I mentioned, the idea of CLARITY has been consuming the regulatory conversation here in the U.S. within digital assets and blockchain industry over the last year plus. With the failed vote in the Senate, which wasn't a surprise, we're back to a regulatory framework that will be governed by the SEC and CFTC rather than Congress. Mark, let's start with you. What have you been paying attention to when it comes to how institutions, both on the TradFi and the DeFi sides, have been interpreting the failure of CLARITY? How are they looking at the path forward?
Yeah, there's been so much focus on the CLARITY Act, you can often get lost in what we've actually witnessed over the last year plus. I think it's important to kind of like, let's just rewind and look at what we've seen from I'll start with U.S. regulators, but this isn't just a U.S. story. This is frankly a global story that you're seeing. For me, I obviously look back in December of 2025, what you got from the SEC in a no-action letter to DTC and what that means for bringing tokenized assets on- chain to U.S. markets. It allows for US Treasuries, which is the largest government bond market in the world. I don't know what the current tally of outstanding debt, but I don't think it's shrinking anytime soon. It's north of $40 trillion, so it's massive size of what's able to do.
We talk about a ton of aspect of mobilizing collateral and what that means. Today, we are going to talk more about some of the equity market structure. You saw a signal from that. What that means to me is while CLARITY did not pass, you continue to see that regulators are going to continue to do what their mandate is, regulate securities markets in the U.S., regulate derivatives markets as it relates to the CFTC, and they are going to do that. The difference between an act of legislation by Congress is it allows more stickiness, as it is harder to repeal something like that, where a new commissioner, a new agency lead and change in administration can repeal some of the activity, but it is not something that can happen overnight.
I am sure we will get into some of more of that in some of the later questions. I really think we missed some of the signals that we have been seeing, this momentum that has been building towards embracing this technology and laying down the groundwork for ways that these innovative technologies can move onshore. Again, we focused a ton of activity on collateral mobility, and today I think we are going to talk a little bit more about the equity market structure and some of the exciting developments we have seen from the agencies there.
Yeah, great point. I think it is important to get as much done the industry in the next two years, prior to 2028. If there is a regime change, whatever, it is important that everybody builds now while we have this tailwind. Joris, what do you think?
Yeah. Well, with Fairmint, we are building the on-chain equity capital market stack. So obviously we have been monitoring that for years. We operate as an SEC-registered TA, transfer agent. For us, the distributed ledger is the official record of who owns what. So, whenever things are moving in that direction, we are obviously monitoring it, and for eight years, we have been observing what is going on, who would be the participant, what would be effectively coming as a rule, as a guidance, or as a law. Today, all that we can see with CLARITY is that no bill doesn't mean no rules. I think that for equity, the law was already pretty clear and had already answered a lot of things. So that is why I think people were fighting for CLARITY on some aspect.
But at the same time, the blockers were not anymore seen as something like a deal breaker for the rest of the industry. To contrary, I think since the reputational risk is gone in our industry over the last 18 months, two years, basically, we see all market participants embracing the technology, looking for efficiency, looking for a better way of modernizing things that they didn't touch for years. And in a way, CLARITY splits the network tokens, like CFTC related one, from tokenized securities that are SEC regulated. And equity has always been on the SEC side, and I'm very happy to see that two days after the CLARITY failed, we had the SEC ruling. And ruling in a way that is, like Mark said, it's giving clarity. So that's important to remind it. This is what people were looking.
But also giving some form of protection, investor protection, issuer protection. And so, I guess we'll talk about that in a few minutes, but it's very important to observe that the failure on the CLARITY vote didn't mean that the industry was lost. To contrary, it boosted everything and it pushed the regulator to move forward and say, "Okay, we won't wait for the Congress. We'll build inside whatever is needed, with staff statement, rules, guidance." And yeah, I think it's fantastic to see that happening because after so many years and the entire world observing, literally waiting for what would be the position of the U.S. on specific things, it was very important, and it was a very strong signal that they sent by ruling that way as a regulator.
Right. Okay, switching gears a little bit. Joris, I know you've been following the SEC's innovation exemption really closely. Can you tell us a little bit about what this means for mainstream blockchain adoption and what you're hearing in the market?
Yeah. So, the innovation exemption is basically the result of the no vote on CLARITY. It was a very strong rule sent, with immediate action, effective immediately. And the idea was to create the tokenized securities venues where literally, in opposition to what is done offshore right now, we would give an opportunity to bring those technology directly, a retail legacy from DeFi to onshore. The best technology to illustrate that is AMMs. And so, the idea here is really a five-year conditional exemptions where that tokenized securities venue can trade tokenized NMS stocks. And I think what's, considering all the debate that we had over the last 12 months on tokenized stocks, is it a real stock or is it a wrapper? If it's a wrapper, what is coming with the wrapper? Do we have full right, dividend right, voting right, future rights, or not?
I think that what the SEC did with this exemption, they just gave a very clear framework. The shares are to be, the stocks have to be the exact same stock as the one that we find on the market. So that onshore, you do not end up with two different assets pointing to the same underlying share, in a company. What I like to say also, I think it is very important to keep that in mind, a token is not equity, but equity can be a token.
To make it possible, it has to be on the official register. This is what the SEC has been providing with this guidance. It is obviously in the moment where we are observing who will be able to do that, how, with which type of support. Will it be incumbent? We saw it with NYSE, OKX. Or will it be also new players? We know that some very early-stage companies, or even some later stage, are already working on this, like TSV. Above all, I think what the SEC was trying with this exemption is they were trying to exclude the synthetic exposure, making sure that same security, same right, would be funneled in the market. If not, then it should be done outside of their regulation. Access being permissioned, I think that is one of the big differentiators with DeFi.
In DeFi, you go on Uniswap, pretty much anyone can do anything there. The moment that you start to take the technology of Uniswap, and you bring the permission aspect to it, then you literally enforce compliance in the system. That is what I like to call regulated DeFi. It is a way of making sure that all the learnings and all the cool stuff that we saw emerging over the last 10 years, a bit outside of the traditional system, are now owned and used in the traditional system, or maybe I should say on traditional assets. That is probably where we get a chance here to see that market booming and to see a complete avoidance of replicating the risk that we saw in the 1960s with the paper crisis when the industry was booming.
Everyone was trying to trade stock, but it was paper-based, and this boom created so much issues that led the entire industry to rethink their design, and gave birth to all the centralized players that we know today with DTC. Today, the risk that we saw with wrappers, SPV all over the world was precisely like, what happens? Issuers do not control anymore who owns what and where. The markets, the one that were systemically done and designed to alleviate risk and to enforce compliance, started to see a fragmentation of their own liquidity going to offshore markets without any control or supervision from them.
Okay.
This is probably where the innovation exemption is going.
Okay, great. I do not know if, Mark, you want to weigh in a little bit on this?
I agree with everything that was just said. I think for me, obviously the swift action, this was obviously something that they knew, they were premeditated that they had in their back pocket to move quickly after CLARITY to give that. They want to bring this innovation onshore in a compliant way, and one that, again, fits their mandate, which part of it is investor protection. Their goal is to allow these tokenized stocks, and ability to do so in a compliant way for U.S. investors to participate and not have to go around the rules, et cetera, to circumvent that. That is not what they want to do. Again, the innovation exemption, I think was two particular things.
Dealer, what it means to be a dealer in a tokenized world, and then also what a tokenized stock venue or a TSV is referred to, what that looks like in an onshore compliant world. I think they did a very thoughtful way about how to allow this activity to grow and kind of begin onshore. It did so with appropriate safeguards. As mentioned, it was a five-year kind of aspect to test. It has certain guardrails on how much activity can be done, which is important for them to understand and make sure that this market is done in a constructive way to, again, fulfill their mandate. So, I think they did a very nice job in kind of framing out that activity to start to begin in the U.S. Again, let us not forget what these definitions of dealer and so forth.
The Securities Act is 1933 and 1934. The world looked a lot different then.
Yeah.
This is an aspect where they are not replacing those, they are just kind of reiterating what some of those definitions apply to today's world. It is a totally different approach from the current administration, as you have heard from many different people, versus the by enforcement action. This is actually revising and giving, if you will, pardon the pun, clarity to some of the definitions that were just left to people's interpretation, and then you get a slap on the wrist. That is not what this administration is doing. Again, I think it just shows the direction that we are going to continue to go over the next couple of years.
Right. Okay.
To [crosstalk].
Go ahead.
I just wanted to add a small note. I think it's a fantastic opportunity for the industry because for so many years, we've seen the technology of companies like Uniswap as something that would completely remodel the way movement of securities would be done, and the async aspect of the pool systems. For the first time, we see the U.S. leading and paving the way for that industry to do that, because it's a real, in a way, borderless technology that will offer every U.S. issuer the opportunity to also live in distribution that were completely out of their own scope in the past. I think it's a fantastic opportunity that is given.
Of course, we'll have caveats and things to work on to improve the system, and that's exactly the sense of the five years. Overall, I think it's a massive move and massive signals sent to the world.
Right. Okay. Switching gears. Another important move by the SEC was its proposed overhaul of transfer agent rules. Joris, Fairmint, one of the first SEC-registered transfer agents built on chain. What's your view on how this proposal is going to impact market structure mechanics, both issuers and investors?
Yeah. I would say a lot happens these days. In the last couple of months, we saw so many proposals and new rules appearing that obviously it's game changer and when we see this big trend. On the TA side, you mentioned we are an SEC-registered TA in 2023, working and preparing for that moment where the market is ready to use the blockchain not to wrap the register, but to be the register. With that, you need to have the regulated transfer agent accountable for it. That's how we can safeguard the securities layers on the blockchain, and that's how the law is designed. For us, TAs have always been the backbone of what can be done on-chain when it comes to securities, and seeing that now the SEC is pushing for a proposal that literally embrace the technology.
If I think of the previous comment to the crypto task force that we send, we were looking for a clear way of how to have an accountable agent on a DLT, distributed ledger. How we would be able to provide ownership certificates in a form that is not paper. How we would be able to also read those rules that are 40 years old, so that it's not an interpretation of our own legal opinion, and our legal teams. It would be really the guidance from the regulator. Since 18 months, they have been providing that. They answer question publicly. They put it on their website. I think that if I had to really sum up the two biggest component of the proposal that are echoing the guidance that were given through open question in 2025.
The first one is the fact that now the master securityholder file, which is the real ledger where everyone is listed as a shareholder in the context of stocks. The fact that they are saying now that it can be a database, electronic version, that's new, but above all, they add the term blockchain, and they say that database can be a blockchain. That is a massive message to avoid all risk of interpretation. That was my first big part of the proposal that stood out. The second one is the term paper. The moment that you start dropping the term paper in front of certificate, you open a whole new world of collateralization, about how you can pledge something, how you can literally turn an asset that was paper-based, that was doing things, but now, no, you can literally leverage that asset without selling it.
This is what this proposal, that is 400 pages, so we could talk hours about it. This is one of the key component. I think that, Mark, you were mentioning to cover both side, the issuer and the investor side. I think for the issuers right now, they have been a lot, the one that were forgotten in a lot of the innovation that we had over 10 years. Everything was done to optimize trading, to optimize things, to maximize the derivative market and everything. But now we are at a point where if we want to keep the pace of these operations that are done on-chain, we need to start providing the right rails on-chain as well. That goes with the registers.
The moment that you start shifting from a very old system with T plus whatever, when you ask to know who is where and who owns what, you are solving one of the biggest concern from issuers, trying to know faster who owns their shares, why this person is selling today or not. Of course, we will still have a way of keeping privacy on corporate actions and all those things. The idea is not to go all in on public corporate action, but it's really focusing on what is the true value that we can offer to issuers when it comes to their own shareholders. From there, we have so many use cases that we can create. Better loyalty program.
If you are a shareholder of Apple tomorrow, you should be able to maybe have access to the new iPhone one week before than the rest of the people. So many things like this can be done the moment that an issuer is able to know better. To do that, we needed to precisely go way more far after the 40 years rules and define clearly what would be the foundation of a TA in 2026. For the investor, as I mentioned it, having a proof of ownership is fantastic as well because we obviously need to treat the market very differently depending if it's a very trading, it's a market maker or a venue that wants to have the system to blur everything and to just trade massively with tons of movement permanently. You don't really care of identifying live, exactly those movement and people.
All the other one, the one that move less, you want to build that connection. You want to be able to connect. For the investor, you want to be able to get a reason to be incentivized to hold those assets in your portfolio. So this is where I think today we can offer so much through this proof of ownership that is guaranteed in the ledger. For brokers and venues, honestly, I think right now all they are asking is a way to avoid the time that they lose and waste on reconciliating things. If we are able to provide them things that move at the same pace as the operation that they are operating, honestly, that's all they want. The SEC is paving the way. It's not done yet.
We still have a lot of discussion on how this proposal will be passed, if it pass. But I think it's going to the right direction. Yeah, I think it's great news to see the regulator once again positioning himself, saying loud and clear where they want to go and sending that message to all market participants.
Great. Thank you. Mark, real quickly, we have discussed and obtained your view on this. Can you share a bit about how getting the master securityholder file on chain is going to impact the ecosystem?
Yeah, as an issuer, that is one that obviously interests me the most, the ability to see real-time kind of who is on our cap stack and think about how you want to engage with investors who want to have corporate access, as an example, to be able to do that. That is how some of the allocation of resources from sell side of how you get that in. I have no ability today to see who is really on my cap table in a real-time way. I want to make sure and have a relationship with our key partners, and that is a way to do that. I think this is obviously market structure change that is not going to happen overnight.
Frankly, there is a lot of education process that needs to go through to explain to, I will just speak for issuers specifically because that is what I represent, to understand how these rules play out to them and ultimately to their benefit. One element that briefly mentioned before is liquidity. All of this evolution and this structure needs to promote liquidity. That is one of the value adds of having tokenized stock venues and the ability to trade in a tokenized way versus some of the old rails, is hopefully it encourages more liquidity. You potentially reach investors that you otherwise would not reach. You reach different venues and ways that people want to transact in a different way that they could not before. So you get more interest in your company and your ability to share that equity to different parts of the world in a compliant way.
That is all of this innovation around it, where we have seen kind of to date most of the activity has been driven offshore in either lookalike wrappers, debt instruments, et cetera, that obviously there has been lots of debate on the volatility around some of those and whether issuers approved of that activity or not. What the SEC has done is addressed some of those concerns and laid down the framework for this market to evolve and this market structure to develop. Again, I do not think it is going to happen overnight, but I think we are on the right path, and I think it is really exciting to see it develop in kind of real time.
Great. Okay.
Yeah. If I can add a word as well. I think what you are saying, Mark, it is vital to start bringing record keeping and liquidity on the same rail. Right now, what we started to see is that this centralized market that was imagined and designed 60 years ago now, starting to see fragmentation happening and all this offshore activity was not captured by them anymore. What the new rule is offering and bringing this master securityholder file on chain is offering, is an opportunity to say from one single registry, we are able now to operate what is the TradFi system, like the Cede & Co, nominee of DTCC that operates for most of the market, but also all the other distribution that were built over the last 10 years that are giving birth right now to massive ATS, alternative trading system.
Plus what the TSV with the innovation exemption is offering. When we are able to plug absolutely all those system to the same registry, we get once again the opportunity to stop the risk of fragmentation. We will see, probably in the coming months and years, a way for issuers to address those different markets and those different segment, maybe with a different type of asset so that they know exactly, okay, that type of asset is done and issued for high-frequency trading. Fantastic. There is no right with that. At least it served things. On the other end, it will address maybe a conglomerate of ATS that are trying to list asset for their specific distribution. At the end, for the issuer, you want to make sure that this is done in a way that they control.
This is where the partnership with their transfer agent is so important. What is really funny with this rule for the transfer agent, the proposal that was done, the last proposal to modernize the TA activity was in 2015. It never passed. At that time, the rule was to really do digital transfer agency. Right now, we are in a moment where it is literally the blockchain and the on-chain transfer agent that are coming. I think that this time they are pushing hard to make sure that everything is clarified so that this activity can be offered to all the market participants.
Great. Okay. Our last meaty question, then we're going to have some audience Q&A because we've gotten a lot of questions. Looking across everything we've discussed, it does seem that a privacy-focused network, such as Canton, it aligns with the direction of where the whole industry is heading. Joris, what is your perspective on how the SEC and the CFTC frameworks fit into the Canton way of working? What do you think the network should focus on from a governance and infrastructure perspective to capitalize on this?
Well, I think everyone is talking about Canton, right?
Yeah.
Which is a significant win. If I remember when I started working in the blockchain industry, eight, nine years ago, at that time when you were talking about permission world, about KYC, about securities, about regulator, everyone was leaving the room. The funny thing is when two, three years ago, we started to see a glass ceiling for ourself to develop our activity in other ecosystem because of privacy concern. We literally discovered Canton whitepaper, and we're like, "Oh, that's probably the AWS for finance that the entire blockchain industry is expecting." All that we see now is moving in the direction where Canton has by design. We don't build new stuff on top. We are literally leveraging a system that was in an architecture that was designed to support all that the regulators are pushing right now.
I think there is a big opportunity in my context for equity capital market. Mark was talking about market structure. I think we need to make sure that we have the right layer to be able to build on top. This is what we see with Canton on our end. We see that we can issue, finance, trade, all that on one single technology, and with the ability to also work with other regulated players whenever it's needed, because they are already there. So, making sure that confidential position are there, making sure that regulators can access things, making sure that we can observe nodes and things that happen, but only if we are meant to be observing these type of things. This is, I think, where we are all going and, yeah, I'm pretty bullish on the direction.
Thanks. Mark, of course, at Canton Strategic, these types of regulatory developments are critical to advancing adoption of the Canton Network. It's a major priority of ours. I'll ask the same question to you. What should the network focus on the next 12 to 18 months? What are the biggest opportunity and risks?
Yeah, I'll just reiterate a little bit of what Joris just said about the privacy element, and it also pertains to one of the questions that we saw come through, so I'll knock that out, two birds with one stone, about how regulators can obtain a complete and timely supervisory view of transaction data. That's exactly what Canton was built about. You get the right information to the right individuals or people. That configurable privacy element that we talk about. It's native in the blockchain that we developed at Canton, where regulators can see real time the data, the transaction data. That doesn't mean everyone in the public domain gets to see that right data. They get to see certain type of data.
I like to think of transaction reporting where a trade happens, there's requirements to report that a trade happened at a certain price, certain quantity, but the names of the institutions isn't necessarily required. Now, name give up can be part of a structure, but that's not required to it. That's kind of the fundamental component that Canton. Regulators will be able to see real time. That means their tools and the way that they look at data will need to be changed, but there's no more guessing game of when you see a flash crash in the treasury market, a spike up of yields, like, why did this happen? Who is doing it? You get the data real time, and you can aggregate that data. They'll need to revise their tools to be able to capture that, but that's all in the works.
As far as the next 12 to 18 months, similar to what we talked about earlier about the fact that agencies are going to continue to regulate in what they've done so far, the important thing for us as an industry is to actually use some of these tools that we've been given. That gives us that stickiness associated with, without that congressional approval. You're not going to see a new agency come in or a new head, new regime come in and be able to repeal things that are actively being used and integral to it. It's on us as individuals, we've been laying down the framework to be able to say, "We want this innovation. We want to do it." Now we have to use it.
That is on all of us as market participants to embrace this technology, use it to get the volume, and that will give it the stickiness that will make sure that it does not get repealed by the new regime. If these tools are being used in significant volumes going through, that is going to be almost impossible for someone to come in and change that. That is what I think the next focus is, to actually use all these announcements, these network of different participants that we have brought in to get that scale. That is going to give us the stickiness. That is going to give us the comfort that CLARITY did not pass, but guess what? It is here to stay.
So, us as a network, we are continuing to focus on delivering what we have built so far. It is getting that volume, getting that activity up to speed and scale.
Totally agree.
Yeah
If we deliver utility in the next couple of years that the buy side and sell side all buy into and it scales, that is bipartisan, and that cannot be undone. So that is really important. The second thing I will add, in terms of having regulatory access and insight to positioning, if you had had that in 2007 and 2008, we probably would have avoided a lot of our problems as an industry. Blockchain can solve for a lot of the risks we have had in the past, too, from a regulatory standpoint.
Yeah. That is a very important point, Mark, and I agree on the bringing real assets on-chain. That is the big move, and that is probably one of the biggest win that we see today. Down the road in the next 18 months, what we are going to see is, one, an increase of those assets, but also, I think Canton is able to own some specific use cases. It is able to unlock interoperability. I think people underestimate how the moment that an asset goes to being programmable, literally being coded, it is game changer because it unlocks all the interoperability possibilities. What we start seeing is really a move on Canton . From there, the moment those assets are effectively programmable, they will be able to go everywhere.
This is one of the massive opportunity as well. I think what we will start seeing in the next 12, 18 months also is open standard, like how we are reshaping and rebuilding or rewiring the industry around standard that are meant to be open source, that are meant to be used by pretty much anyone in the industry. This is a bit what was done in DeFi over the last 10 years, but that now we apply to the old system. I think this is a great opportunity, and we would start seeing big institution moving in those direction, taking leads in governance of those open-source project, making sure that they pave the way so that all the things that they have been working for for decades is now continuing in these open standard.
Awesome. Thank you guys for the thoughtful discussion, Joris and Mark. I am going to turn it over to our moderator, and the three of us can take some audience Q&A.
Thank you, Mark. We can start with a few that were submitted in the Q&A online. We see that you folks are asking about determining legal settlement finality. As Canton Network supports different forms of tokenized cash and tokenized assets, what determines legal settlement finality when a transaction uses a stablecoin or tokenized deposit as the cash leg? Is finality established entirely by the on-ledger transaction, or does it depend on the issuer's legal obligations, redemption arrangements, and off-ledger records?
I will start with that one. Again, I think that is the benefit of blockchain technology, that you get that settlement finality, and that is part of the work that DTC, for example, has done and done the work to allow for that. That is what their no-action relief allows for those real-world tokenized assets to be legally settled on-chain. Again, I have used stablecoin, tokenized deposits. There can be many different ways to represent the cash leg, and that is what really is encouraging that is going to allow some of these DvP-type transactions of buying US Treasuries, buying equities, repo-type activity on-chain. That is something that I think is natively kind of built in to the blockchain.
Great. I think we should discuss is a couple questions here about the DTCC commercial launch of on-chain transactions coming up any day now, I believe, in October. Can we talk a little bit about that? Joris, what you are watching when it comes to the DTCC commercial launch, and then of course, Mark Wendland and Mark Toomey.
I did not hear well the beginning, just so you get it. From what I understood, what it seems to me is really we are bringing a whole new world of asset on-chain. They will be able to move at light speed. They will be able to be used for collateral. Pretty much all that is done right now, if we think of DTCC over the last 10 years, it was very hard to see where they were going and what would be the strategy. I think that right now what they are doing with Canton is precisely making sure that all the assets that they are maintaining, custodying, are being used for all the use cases that we see everywhere today in other part of the finance industry.
It is really great to observe how fast this 60 years old entity is moving, how they are, if we think about it, we are seeing a revolution in term of tech. We talk about COBOL moving on- chain here. It is almost how I can phrase that. I think it is fantastic to see all the work that is done by all those people to make sure that all these U.S. assets are effectively plugged to the right wires now.
The DTC, as mentioned before, was no action relief by the SEC that was not for anything and everything, it was for specific types of things. We have talked about the US Treasury market and the subset of the U.S. equities. What I expect and what you saw even from the July transactions that were done, you saw, I think it was seven different types of transaction types, DvP, buy/sell type activity, but also financing flows, repo, sec lending, those types of activity as well. What you are going to see across Treasuries and equities is you are going to see the kind of bringing together of trading, financing, collateral. Again, we have talked a lot about, I have talked a lot about the one that I think is you are going to see the biggest impact immediately in the utility function is the collateral mobility of it.
That is a significant financing drag for market participants, and I think that will be one that you'll see kind of the early-stage activity was all about how you can take collateral and use it to margin different types of transactions.
Yeah, I would just add the collateral mobility use case is what often we hear, especially in the buy side investors becoming most excited about in terms of capital efficiency, and using their balance sheets more efficiently. This is a first step in that direction. I think zooming out, the DTCC, you couldn't have a more blue-chip institution, trusted clearing house in traditional finance. The fact that they're moving in this direction is very symbolic. It sends a great message to the marketplace.
Bringing it back to Canton, the Universal Burn CIP was approved. Everybody's been talking about that online this morning. What impact do you all see this having on the Canton Network? Maybe we'll start with Mark Wendland here.
Sure. I think just taking a step back because we have, again, I think a large group of listeners in and may not be all familiar exactly what that means. But, as Mark Toomey had kind of highlighted in the recap, there's the Global Synchronizer and there's subnets or sub-synchronizers that go through underneath that. Previously before this CIP, those subnets or sub-aspects were not contributing to the burn and the ultimate Canton Coin traffic, et cetera, of the Global Synchronizer. This is unifying the reward and burn mechanism across the Canton Network. It's not through license fees or other ways. It's all captured in the same aspect, and it's the same kind of cost of traffic around that.
But if you think about why was the design even there in the place of having a Global Synchronizer versus the subnets, again, that goes to the design of Canton. You think about other blockchains. Why did L2s even exist? It was about creating block space so that you did not run out of that aspect of it. Part of what I think of the Global Synchronizer and the subnets and that design of that was that is not a capacity constraint because of its design and the way that you can have these subnets with high volume type of throughput then still exist and not be impacted by, we do not want to impact the Global Synchronizer and the flow of information there. This just unifies the burn aspect associated with it.
I think that is what lots of talk has been about the BME and so forth, I do not know if this was one of the questions. My own view on BME, I think has been too much focus on BME. If I look at like a growth company, which Canton Strategic Holdings is in a growth mode, we are year two associated with it. I think the element of a growth company that is paying back a cash dividend, so to speak, is not one that I want to invest with. That means they do not have ways that they want to invest in their network. We have plenty of things to build and growth that we want to do versus getting to that burn mint equilibrium.
The whole design between the burn mint equilibrium was to align incentives so as it scales and grows, not for early stage to equate this deflationary environment. I think it is we want to continue to invest and grow in the network, which we are doing. I think this Universal Burn CIP aligns that interest so that as the network continues to grow, everything feeds back into that loop. That will be implemented over the course of 2027.
Yeah. I think it is also a great way to remind the complexity of building an ecosystem and the importance of designing the right incentives. We saw the evolution over the last two years since the white paper was released, how Canton has been able to structure itself. It is now entering in a stage where it is very important that whoever is effectively using and leveraging this technology, all the work that was done for years, is also contributing to the entire ecosystem. By contributing, also participating in the rest of the incentive that we have on the Global Synchronizer. I think that, like Mark said it, if we want to continue to grow, bringing clarity on the incentive, aligning everyone is also key to be able to bring even more participants, whether they are big and large institution or new builders.
What I see coming with this new CIP that just passed, and congrats, honestly, it was great to see how fast the network has been able to move forward. It's not all the other network that can say that they are able to come together and work around the new improvement protocol and able to vote that and do that in a way that is extremely sustaining the governance, facilitating the discussion where everyone can interact. So now we are in a situation where I think we will turn it into an opportunity. I imagine subnets or whatever we call them, like this part of the network being used for new use cases, being used for subnets that will be able to create their own level of incentive there as well.
All that without being done on the detriment of the rest of the network, because now we are all aligned. So, I think it's fantastic news.
Yeah, I think Universal Burn CIP is a great example of the democracy and governance of the Canton Network in getting all of the partners involved to the same place. This is a great achievement, and it's a really important time for the Canton Network. It's a really important CIP. So, I think with that, we're out of time. I appreciate you guys participating. I encourage the audience to reach out to us, ecosystem builders, investors, shareholders, and contact us if you want to have individual conversations or use us as a resource. We're here, and we look forward to doing this again next quarter. Thank you.