Canton Strategic Holdings President Mark Toomey said institutional participation in the Canton Network continued to expand during the third quarter as infrastructure providers, asset issuers and market participants prepared for a planned late-October rollout by the Depository Trust & Clearing Corporation.
Toomey said a DTCC pilot involving more than 30 firms was completed July 15. He also cited six new Super Validators during the quarter: a16z crypto, LSEG, Marex, Paxos, Shinhan Asset Management and TreasurySpring. The Canton Foundation now has more than 100 members, he said, with ISLA and ISDA among new members working on legal and operational standards for securities-lending initiatives.
Network activity and tokenized assets
Toomey said applications were bringing additional asset-issuance tools and dollar liquidity onto Canton. While network statistics showed less activity in the quarter, he attributed the decline to application optimization and process changes related to CIP-104 tokenomics updates.
Among the quarter’s developments, Virtu, Tradeweb and M1X Global completed what Toomey described as a first-of-its-kind fully on-chain repo trade on Canton. The transaction used USDM1, a digital bond issued by the Republic of the Marshall Islands and backed one-for-one by short-term U.S. Treasuries, as collateral.
Toomey also pointed to launches and announcements involving Circle’s USYC tokenized money market fund and the World Liberty Financial stablecoin, USDM1. Broadridge launched its DLX platform, which he said is intended to allow banks and broker-dealers to issue and service tokenized bonds and equities on Canton while connecting to DTC’s forthcoming launch.
In the U.K., Canton participants are involved in work surrounding the government’s Digital Gilt Instrument, or DIGIT, pilot. Toomey said issuance is expected no later than the first quarter of 2027, and that the Bank of England has committed to making DIGIT eligible collateral for its market operations. HSBC Orion won the mandate to serve as the issuance platform, he said.
Governance changes focus on incentives
Canton Strategic Holdings said progress continued toward the full implementation of CIP-104, which is designed to tie network rewards to verified activity measured by Canton Coin, or CC, burned. Toomey said the approach is intended to reduce reliance on legacy activity markers and more closely link reported activity with on-chain usage.
The company highlighted approval of the Universal Burn CIP, which expands the network’s burn-and-reward framework to both the Global Synchronizer and private synchronizer subnets. Previously, traffic on dedicated subnets was paid through license fees and did not burn CC or generate CC rewards, Toomey said.
According to Toomey, the proposal is significant for Canton’s burn-and-mint equilibrium, or BME, framework. He said a BME of one represents equilibrium, while a measure below one indicates inflation and a measure above one indicates deflation. The average BME during the third quarter was 569, he said.
A separate weighted CIP voting proposal remains under discussion. The proposal would link Super Validator voting weight to locked token balances in an effort to increase governance participation, though Toomey said the framework remains subject to change and would require affirmative Super Validator votes.
Regulatory outlook for tokenized securities
In a discussion on U.S. digital-asset regulation, Fairmint Chief Executive Officer Joris Delanoue said the failure of the CLARITY legislation did not eliminate regulatory pathways for tokenized securities. Delanoue said Fairmint, an SEC-registered transfer agent, views the blockchain as the official record of ownership and has monitored the regulatory environment for years.
Delanoue said an SEC innovation exemption would establish a five-year conditional framework for tokenized securities venues to trade tokenized National Market System stocks. He said the structure would require tokenized shares to represent the same stock and rights as securities in traditional markets, rather than creating separate wrappers or synthetic exposure.
“A token is not equity, but equity can be a token,” Delanoue said.
He also discussed an SEC proposal to modernize transfer-agent rules, particularly provisions recognizing that a master securityholder file can be maintained electronically and on a blockchain. Delanoue said such changes could support digital ownership records, improve issuer visibility into shareholder bases and reduce reconciliation burdens for brokers and trading venues.
Mark Wendland, chairman and CEO of Canton Strategic Holdings, said regulators’ actions could allow tokenized assets to develop within existing securities and derivatives oversight. He said the next 12 to 18 months would be important for market participants to use the regulatory tools that have been introduced and build meaningful transaction volume.
Wendland said Canton’s configurable privacy architecture is designed to provide regulators with access to relevant real-time transaction information while limiting visibility for parties that do not need access to confidential data. He said broader adoption would depend on demonstrating utility in areas such as collateral mobility, trading, financing and settlement.
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