Are institutions launching their own token? How do institutions operate on a trustless, interoperable network that is decentrally governed? On the first episode of Tokenized, Simon Taylor, Head of Content & Strategy @ Sardine, and Cuy Sheffield, Head of Crypto @ Visa, are joined by Yuval Rooz, CEO of Digital Asset to discuss the launch of Canton Network, how crypto bridges to mainstream use cases and regulatory developments in the broader ecosystem.
On the first episode of Tokenized, Simon Taylor, Head of Content & Strategy @ Sardine, and Cuy Sheffield, Head of Crypto @ Visa, are joined by Yuval Rooz, CEO of Digital Asset to discuss the launch of Canton Network, how crypto bridges to mainstream use cases and regulatory developments in the broader ecosystem.
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This episode is brought to you by Visa
A world leader in digital payments, Visa is bridging the gap between traditional financial institutions and innovative blockchain networks, helping players in the payments ecosystem navigate the ever-evolving world of tokenized fiat currencies with confidence and ease. Learn more at visa.com/crypto.
This podcast is also supported by Digital Asset.
Digital Asset is excited to launch the Canton Network, a proven, trusted, and scaleable service that provides interoperability between institutional-grade tokenization platforms. The Global Synchronizer is now live, managed by Linux and institutions are actively using Canton Coin to manage the governance. No, the banks haven’t launched a token in the classic sense, this is much more interesting. They’ve done it to make all token networks interoperable. Find out more at canton.network
Sy Taylor 00:10
Welcome to tokenized My name is Simon Taylor and I am your host for the tokenized Podcast. I'm best known as author of FinTech BrainFood. And I'm also head of strategy over at sardine Joining me is my co host, Cuy Sheffield, head of crypto these. Cuy, how are you?
Cuy Sheffield 00:32
It's great to be back. And let me just say like Simon, the quality of your analysis, the breadth of topics that you're covering treasure and five, FinTech, crypto, the pace and volume of the work you put out. It's remarkable and so super excited to have the opportunity to partner and and get the show going yet and to learn from incredible people like our guests today.
Sy Taylor 00:54
Indeed, well speaking of our guest, Yuval Rooz, who is the CEO and co founder of digital asset Yuval how're you doing today
Yuval Rooz 01:03
busy, but during Great, thank you for having me
Sy Taylor 01:06
And I just need to remind listeners that views and opinions of our contributors today are theirs and don't necessarily reflect those of the companies they're representing. And please don't take what we say is tax financial or legal advice for the love of goodness. But with that said, you have a we've got some pretty good news. This is the Canton network going live. Canton network has announced the launch of the Global synchronizer the cutting edge D centrally operated and govern and infrastructure for finance. After 10 years of development, it's gone live. And participants involve a broad range of companies who are running nodes in the network, some of the largest financial institutions on the planet such as Dr. W, and Broadridge, and many, many others. The Linux Foundation has added the global synchronizer as an official project, helping to ensure transparent governance. And the network is fueled by get ready for this, a utility token called the Canton coin, which incentivizes third parties to build on the network and is used to pay traffic fees for the global Synchronizer. This sounds pretty huge. So start wherever you like you've all. Tell us a little bit about Kent on the global synchronizer why you launched a coin, where do you want to start? Sure,
Yuval Rooz 02:34
and maybe I'll put my disclosure that you know, the the views that I represent are as the CEO of digital asset and I don't actually represent the Kanto network. As you mentioned, the Kanto network is fully decentralised from day one network, there wasn't any entity, any foundation that actually launched the network. The exciting thing is that 13 organisations which will grow very quickly, have actually jointly, in a decentralised way, have agreed to launch the network. And to me, that's, that's just extremely exciting. You know, as you said, it's been a 10 year project, I started my career at Citadel and then and then dear W trading. And when I started this company in 2014, even before Aetherium, you know, our view was that eventually every asset in the world, whether it's backed by a physical asset, or completely D materialised asset, is going to become a digital asset. And a lot of times people say, well, most things today are digital. And that's true. But when I say an asset is digital, it means it's been issued digitally native front to back. It's not just the issuance, it's not just that the claim for the asset is digital. It's really that all the rights and obligations associated with US assets are digital. And, you know, it's, it's interesting to think about that, because, you know, a lot of times when people think about crypto, these are bearer instruments, they don't really have lifecycle events, they don't have complexity of corporate actions, proxy votes, dividend payments. And what people don't understand is that a lot of times, the reason why things don't move fast, while it takes a long time to settle, is that a lot of books and records and systems have to be updated in the backend. So when we talk about tokenization, and digital assets, we're actually saying we really need to rethink the pipes, and create a network that can actually manage these assets front to back, you know, in a fully digital manner. I'm sure we're going to talk a lot by why it took so long to get to this point.
Cuy Sheffield 04:46
What's fascinating is you've been in the space really longer than anyone and seeing the evolution of the concept of of tokenization Where do you think we are today versus where it was when you started and and kind of what is led to the need to have this new network here like Canton, compared to existing block chains and other infrastructure that's been out there evolving in the crypto ecosystem?
Yuval Rooz 05:13
It's a great question. And the thing that is most exciting to me is that you know, through some of the crypto bull markets, a lot of chains have been added and now you're having I don't know today I heard someone quoting 25,000 coins. And really, if you start thinking about just Bitcoin, I think Bitcoin wanted to create a decentralised censorship resistance asset, pick your flavour, what is the value of Bitcoin store value, anti inflationary, it doesn't really matter, but it is a unique asset. Now, if you park that aside, maybe there are a few, a few other assets that really don't have other utility other than store of value, meme coins potentially, would fall into that category Litecoin, some of these other assets that really are just store of value, if you believe in it. And then came this whole category started with Aetherium, which is smart contract chains. And smart contract chains, although have an asset associated with them, their whole mission and goal, a theorem says it's going to be the world, the world computer, but they're all effectively trying to become the books and records for assets. Right? It's you have that Aetherium native token, but really what people are trying to do is create new asset classes on top of it and similar and polygon and avalanche and you name it, what we are seeing and this is what's is exciting, is people are starting to say okay, cool, we build these technologies, they're cool. They have cool emojis, they have very good social, you know, but what is the utility that is running on them? And I think that for the most part when you're starting to look at the crypto network, and this is not me being disrespectful or trying to diss it, but when you're actually looking at most of the activity today, it's crypto to crypto, right? So it's D fights bearer instrument being changed on uniswap. For other bearer instruments. If it's yield Baron defi protocols, you pledge crypto assets, and you get, you know, access to liquidity, but but really, when you think about the crypto ecosystem, it's for the most part, crypto to crypto. And really, what you've been seeing in the last couple of years, is institutions are starting to say, Well, how do we actually use this technology to start driving, you know, efficiency and utility in what you would say track five products, money market funds, the you know, flavour of the day, US Treasuries, gilts, repo, private equity, and we can keep on going mortgages, real estate. That, to me is very exciting. And to be honest, the reason why it's exciting is because that's why we started digital asset, that to us was the Holy Grail. Because even if bitcoin, rallies 10x From where it is today, and it becomes, you know, a $10 trillion market, when you plug that compared to real world assets, they're way over $100 trillion of assets. So I always looked at tokenization of real world asset as really the Holy Grail and not to me, it's really what's exciting, and you're seeing in the last couple of years is becoming more and more of the focus of the industry. It's
Sy Taylor 08:42
interesting, you talk about the rise of the crypto to crypto trading and this parallel global financial system. But this parallel financial system, amongst itself has many chains, there is not yet one chain to rule them all. And there's not one network to rule them all. And that problem is exacerbated in financial markets times like 1000, because the assets are more complex. They're less programmable. There's a lot of history with those assets. So there's a real need to try and make them interoperable. So how does the global synchronizer encantan? Make assets make networks interoperable in the first place? Yeah.
Yuval Rooz 09:21
So listen, I think that if we take a step back, and this is really maybe why it taken so long, well, what does it mean, and what is needed for a public chain to become the books and records of a real world acid? And I think that that's extremely important, because I think that one of the main reasons why you haven't seen the traction that we were all hoping is the following in our opinion and digital assets. In order to get to nirvana of blockchain. Get to that holy grail. There are three elements that are needed to be satisfied. Control privacy interoperability, I'm going to do an analogy. It's a terrible analogy. I hate doing this analogy, but it just fits very well. When the internet got created, people realise there is a massive opportunity to interoperate data. But what they realised is that, in order to make that happen, you have to give the creators of data, or the creators of applications, the tools to control who gets to access that data, under what scenarios they share the data, and what needs to remain private. Right. So when the internet got created, it started as intranet. But as the protocol started adding features, like, you know, you could do SSH, you could do privacy, you could include a privacy certificates, you can add user name password, you can decide that once you access the website, who gets to see what you effectively have this fine grained control. Well guess what the.com happened, right? Like, that's really what got people comfortable is like I can actually conduct business on this public network. Right. And I think that that is extremely important. Because if you park aside blockchain, and you think about the internet, some pretty mission critical systems run on the internet today, regulators are comfortable with the internet, even though it's a public chain, that a lot of really bad stuff is happening on the same network. And the reason I think that they are comfortable with that is because you have the protocol gives you the tools, to again, have permissioning have control, the network is still public, but you as a creator of an app in the internet would be a website, have the ability to send those controls. So if you kind of translate that to blockchain world, we think about it the same way. And at least in our view, that dichotomy right now till now, until cancelled got created and launched was that you had to choose one of the following. Public chains usually were associated with being permissionless, meaning no privacy, and no control. And really, to solve for control and privacy. You either had to do a lot of funky things with multisig wallets, you had to do funky things with off chain data, and then really synchronising hashes, but then you're really loose composability of smart contracts, really, people have been trying to kind of like, make it work, where there was the other sides of the coin, no pun intended, which were companies that were saying, well listen, we want to attract, again, real world assets. So we have to solve for privacy and control. So we're just gonna give up an interoperability, and we'll create this private chains. Because in a private chain, I have more privacy and control, aka the internet. But I'm gonna give up, I'm going to give up an interoperability where again, the permissionless chains, stalled for interoperability, but gave up on privacy and control. So for us, the price, you know, at the end of the road was, can you actually solve for all three. So I think that it's extremely important that Canton, in our opinion, is the only public chain today, that is not just permissionless. By default, it actually gives the app creator the smart contract designer, to set the privacy and control of each app. And the reason why that is so interesting is because we know that our world is not binary, it doesn't have just black and white, there's all shades of grey in the middle, that are different privacy and different control models. And on catch on, you could actually have a fully permissionless application run, think like a stable coin. And I can have a fully private application, think about bilateral trading. But now I can actually compose a transaction between them without having to rely on you know, acid bridges, I don't need to have messages communicate. So when you actually look even at some of the L tos, they can't even interoperate with one another. They even have to actually create acid bridges between themselves. That to me is really what the importance of this global synchronisation is that now I can synchronise applications that don't share the same privacy or control model. And really bring that value proposition in my opinion of blockchain governance
Cuy Sheffield 14:24
and balancing incentives of a network like this. You mentioned there's a Kantian coin. Now, what does that mean? What does the coin do it? How's the network being governed?
Yuval Rooz 14:35
Maybe start with? Why is it called Canton? And it's kind of related to your point. And, you know, when we started it, again, our view that you could just have one model that fits the whole world. It's a very aspirational thing. I wish we were all under one country with no borders and same rules. Definitely make life comfortable, but I also think it's pretty naive. And the reason for the name was that we just believe that again, you should be able to build different applications with different governance rule, different privacy rules that all interoperate together. So it's a funny story, our team, our team that built it is in Zurich, I don't know how much you know, but Switzerland operates with the Canton system. So every Canton has its own ability to set, you know, taxes, you know, all kinds of rules internally, but they all quote unquote, interoperate under Switzerland, right, they're all part of Switzerland. And that was kind of the idea of the network is that you can have these different, quote unquote cantons that really interoperate with one another under one network. I think that maybe when we talk about governance, I think it's important to kind of distinguish that every application will have its ability to govern itself, right. So they set like I said, there are rules, because that's the flexibility of the layer one. But when it comes to the network itself, chi, for example, with respect to the token, that was a very important component for us that, you know, again, as I'm saying, we're trying to attract the large enterprises that are heavily regulated. And the reality is, you know, we were we were under direction to kind of launch a foundation like most of the layer ones. But then we asked ourselves, Is that the right thing to do? Again, we wanted to send a very strong message, that we are here to enable real world assets. And we are serious about first of all decentralisation, and we're serious about proper governance. So rather than just, you know, starting a new foundation and writing the rulebook ourselves, we said, is there any foundation or institution that have been known to run, you know, major, important projects that are decentralised and have the right transparency, and have been proven to be successful? So you know, after very constructive conversations with the Linux Foundation, not to be mistaken with hyper ledger, which is a project under Linux, but actual Linux, the parent organisation, we came to an agreement that we will set a foundation in the US. So the foundation is set in Delaware, and the Linux Foundation is governing it, you know, the foundation will decide, are there changes to tokenomics? Are there changes of, you know, what should the network focus its development on, so no different than most layer one foundations, but we really want it to take a governance model that has proven itself for many years, on pretty successful decentralised projects. And to me is extremely exciting. To your question about the coin. Again, we actually want it to go back to what started this movement, which is Bitcoin, we didn't believe that you really need to sell coins to investors in order to make this you know, we digital asset, have raised money, the old fashioned way, going, convincing investors to give us money for equity, we've generated revenue from clients. And over the years, we've kept on investing to solve this problem. And you know, we've assembled a group of impressive companies that believe in our vision. And we've effectively given the reins of the technology to the network. So the coin is starting from zero, there is no pre mine, there is no selling coins to investors, the coin is a medium of utility, to pay for transactions in the network. The people that will earn the coin are the validators in the network. But I think another unique thing about Canton is when you look at some of these chains that have been created, what ends up happening is their business model is really to drive through gas or something like gas, the price of the coin out. But then the apps are actually the ones that create value for the network. I sometimes give this example, tomorrow, if Apple came up with a new iPhone, and you had the best camera in the world, and the best reception in the world. But it said none of the iPhone apps that exist today can work on this phone. Nobody would buy it, right, the value of the iPhone today and smartphones is the ecosystem of applications. And when you think about building a network, you know, one of the things that makes these networks successful is the ecosystem of application. So for us, when we were thinking about the design of Canton, we wanted to make sure that in the long term, the application providers will have equal parts of the reward of Canton coin, and really kind of think about that at equilibrium. Running the infrastructure is just as important as bringing killer apps to the network. And I think that that's again, an extremely unique characteristic and something that we're very proud of.
Sy Taylor 19:57
Yeah, it does feel quite different. To a lot of the other coins out there, so no pre mine, you're not gonna be able to necessarily buy this on exchanges or whatever else this is for the participants and those adding value in the network only, in a lot of ways.
Yuval Rooz 20:11
Yeah. And I think eventually there will be exchanges. At the end of the day, we really want to prove that there's utility that runs through it, Simon, you bring up at least in my mind, a good point. Another feature of Canton is that the tokenomics Er is going to be extremely correlated with the utility of the network, we really want to show that the value of the coin will appreciate in value. As we end the network participants are able to bring real world utility to the network. So eventually, people will be able to buy these coins on exchanges, because they will have to pay for utility. But it's extremely important for us in the early days to actually show and that was why it took so long. Canton was actually available in 2020, we actually wanted to build assets on Kenton, before launching the public network, we actually wanted to say that when we launch it, it's not you know, build it and hope that they will come we want it to bring them and then say Now let's create a public chain to allow to interoperate all these assets, we want to show that utility, we want to show the value that it can create. And then I'm sure that there will be some exchanges that will integrate into the network.
Cuy Sheffield 21:22
And we'd love to get into some of the use cases that you're excited about the end of most as well. Yeah,
Sy Taylor 21:27
we've got one sort of coming up. That is an example of a use case. So I'd love to get into that too. So before we do move on to part number two, where we discuss more news, we need to remind you that this podcast is brought to you by Visa. A world leader in digital payments. Visa is bridging the gap between traditional financial institutions and blockchain networks, helping players in the payments ecosystem get through and navigate the evolving world of tokenized fiat currencies with confidence and ease, you can learn more@visa.com, forward slash crypto. And the podcast is also supported by our friends at digital asset. They're excited to be involved in the launch of Kenton network, a proven trusted and scalable service that provides interoperability between institutional grade tokenization platforms. The global synchronizer is now live managed by line x and institutions are actively using Kenton coin to manage the governance. No, the banks haven't launched a token in the classic sense, this is much more interesting. They've done it to make all the token networks interoperable. You can find out more at Kent on dot network already so the next story I had, aside from my voice cracking was fidelity international going live on JP Morgan's token during this collateral network TSN. So, the tokenize collateral network sits on the Onyx digital asset service and operates as a private blockchain based platform which is used for tokenized asset movements, including collateral settlement. They've started with the tokenization of money market funds and aim to expand across equities, fixed income and a range of asset classes. So talking of use cases, it sounds like Fidelity International and JP Morgan are looking at a number of use cases. You mentioned money market funds earlier, are you seeing that as one of the major use cases? And what are the use cases? Have you seen in the last few years that are gaining volume and traction? And why? First
Yuval Rooz 23:40
of all, it's a very exciting development. And you know, I'm actually very proud of JP Morgan for pushing the boundary and fidelity. I think all of these projects are moving all of us forward. And to be honest, I believe that collateral mobility is a use case that can transform capital markets in a way that not a lot of people, especially in crypto really understand. Actually, I think a lot of crypto people now starting to understand when they look at the quality of collateral that goes into defi protocols or how important is to manage collateral? Well, some crypto companies that I won't mentioned that that didn't manage risk well, and are no longer with us, unfortunately. So I think that collateral is an extremely important component of making markets work. When you think about the current interest rate environment, um, the cost of balance sheet is becoming really, really important. So I think that one of the big opportunity and this is really what I think JP Morgan is showing with fidelity and I think you're gonna see more and more is that if I can actually onboard digital collateral into these networks, and now I can mobilise it 24/7 across jurisdictions, I can actually reduce significant amount of risk out of The system. But I can also improve balance sheet right? Today, a lot of companies over collateralized their balance sheets, because they just can't move balance sheet to meet their their margin requirements in different jurisdictions. If I knew that I can move, you know US Treasuries from Hong Kong to the US in real time, I wouldn't have to have, you know, the big balance sheet over I mean, if you if you really think about it, crypto solved a similar problem with stable coins. For those that remember, in the early days, you have to had like pretty sizable bank accounts, in different jurisdictions to be able to capture the liquidity opportunities in different jurisdictions, and then tether came and said, Ah, sure, that's not very convenient to keep on waiting for wires to go. Because you know, by the time the wire it happens, all the opportunity on the other side of the world have have gone and that's really kind of think about that like collateral. So what did companies like my previous employer, dear W did that you had to over capitalise your legal entities to be able to meet those opportunities, and then came together and said, now I can just move us dollars for you globally 24/7. So think about that. Similarly, that it's not just cash that gets used as collateral, it's on the market funds can be used US Treasuries, gilts, euro bonds. And I can keep on listening, though. So this is a great example, I will tell you that digital assets, collateral mobility is probably one of the most exciting things that we're focused on these days. And again, if I tie it back to the cantle, network, and kind of where we talked about the difference between public chains, and private chains, I think the big opportunity is if you could do things in a regulatory, responsible manner, meaning you could have privacy control, but have full interoperability of a public chain, that's when you really unlock unlock the opportunity. Because really, what you would want is you would want the collateral to go into defy protocols, you would want it to go into prime brokers, you want it to go into FCS, you want it to go into clearing houses, you want to go into your lenders, like there's just so many people that can put on it, where if you're on a private network, you have to bring them all to you, which is much more challenging. So
Cuy Sheffield 27:16
that was the direction I wanted to head of for this use case, how much of it is if you tokenize the collateral, you can just move the collateral, you know, 24/7, potentially cross border, it's more efficient to transfer it from A to B, versus the ability to connect that collateral to smart contracts, and to other types of logic that can monitor instantly liquidate and affect the transfers of it without the defi kind of smart contract aspect, are you saying it's still solves a big problem if the collateral could just be transferred faster. And then it's another piece if not only can the collateral be transferred faster, but you can programme and write code around when that collateral that how that collateral is transferred, which it sounds like there's not an easy way to do in many of these markets today.
Yuval Rooz 28:07
I think that it is both because today, again, if you just told people I can give you programmability, but I will give you the ability to just move it 24/7 in real time, I think you unlock a massive opportunity. But I do actually think that your point about smart contracts allow you to create business models and models around collateral that today you just wouldn't think about right? So I by the way, think about defy is just proving to tread phi, hey, you could run your businesses more efficiently than how you're running it today. Right? So to me, actually, the smart contract aspect of it is extremely important. One thing that I just want to make sure I say about collateral is that I think a lot of people don't, you know, appreciate the complexity from a legal framework perspective, like, for example, most people that used to say to them, Hey, can you prove to me that your collateral is bankruptcy remote? And although raise an eyebrow and I'll go like what are you talking about? Right? Now, it's only if you lived in a banking system or in capital markets through the financial crisis, or through a bankruptcy of someone that you really understand why bankruptcy remote is extremely important. And this, again, goes back to why it took so long to build count on is because we really thought about how can I show a regulator that in a lot of these edge cases, you know, they don't happen, but when they happen, especially if you had things at scale, it could have dramatic effect. You could actually still work within the regulatory framework, you could still prove to those that you pledged the collateral that you would be, you know bankruptcy remote, you could still prove that there is no such thing as a Dow hack that, yeah, I didn't want that collateral movement to happen. So I'll just convince miners to forget about a transaction. Like those are things that you know, when you start thinking about big markets, that's what regulators would want to do. I know, that's what they would want to understand. So I think the opportunity is massive. But I think people underestimate how much challenging it is to allow collateral to fit within existing regulatory and legal system to give the protections that it's supposed to give. And
Sy Taylor 30:17
the crazy thing about collateral is people don't realise how it's in everything in financial markets, like your point about, I have to have these legal entities in lots of different markets, and I have to pour too much collateral into them and it gets stuck is one night, you remember talking to ripple in the early days about like that, that collateral getting stuck, I thought was a great marketing phrase, because it's sitting there and it's being unproductive, because fundamentally, I just physically cannot move it. But just in case, I gotta make sure there's enough there and all and that's, that's going to be shut. Now, it's not doing anything productive for the next 812 hours whilst that markets asleep, but I've still got to leave the cache. Because it would take longer to wire it back home and use it somewhere else than just leaving it there, the collateral or whatever it is. So that efficiency thing is just unbelievable, then you can follow the sun and you can take advantage of a global market and in a really different way. But in just one asset class, if the asset classes all become interoperable, then I can move my collateral between asset classes. And I think that's the build that comes on kind of gives us you know, it's nice to have 24/7, collateral and money market funds. But what if I could take the collateral that I'm using for this type of asset class and move it to some other on some other exchange in some other jurisdiction somewhere else? Or even not in an exchange? So hugely exciting? Does that mean anything for person on the street, though, because I think one of the things we get lost in in financial markets learned quite a lot is like, it would be great if we were more balance sheet efficient, but people don't realise the impact this has on them day to day versus, you know, with Visa that they're seeing that logo every single day. It's funny
Yuval Rooz 32:00
that you say that, but I think yes, is it a year from now that we're going to see it? No, I think we're a few years away. But I'll give you an example. Today, if you're a private bank, or like a high net worth individuals, and let's say you have a massive position, and in private equity, you could go to your bank, and say I would like to pledge my holding and a private equity as collateral against a loan that I want from all of you. And by the way, I'm not necessarily saying that there's an ex banker, because I'm not but but at least from conversation that I had, for the most part, they don't really like doing that. It's a lot of headache. How do you actually perfect title on that collateral? How do you make sure that you really have your n? How do you verify that it's there? All of those things are very challenging, but if you're a high net worth individual, it's the cost of doing business. So they'll do it for you. But peasants, like Simon, you know, if you were to go and say, Hey, I have my $10,000 exposure at KKR fun. Can I can I pledge that as collateral? Well, no, because the again, the pipes are not wired to do these things very efficiently. And I think that what crypto did do very well, is it actually said when things do connect to one another seamlessly, there is an opportunity, and I do think people can be educated and people want to be educated to say, Well, now, actually, if I can actually pledge different assets that are within my ownership as collateral against a loan, that I want to take those things as long as we can actually rewrite the pipes to make the marginal cost of moving and securing these assets as close as possible to zero. Yeah, absolutely. I think that that will have implications on consumers.
Cuy Sheffield 33:49
I think that's such an interesting example that we've seen in the crypto ecosystem, massive experimentation around crypto collateral backed lending, and these defi protocols. The fact that someone can put up $100 and be able to borrow $50 against it is really interesting that you don't have to be a high net worth and go to a banker. The challenge is that the collateral that you're using, it's it's a crypto asset, and it's volatile. And so if you can have tokenized real world assets that are more stable, but still lower that barrier to entry for people to be able to use them as collateral to borrow against. That seems like a big deal for financial markets globally. Now, getting back into what you're seeing with Canton, we talked about collateral mobility as one use case. What are other use cases that are being built on the Canton network now that you're most excited about? And we'll talk about some of the financial institutions that you have been building on it, and what is really resonated about it with them.
Yuval Rooz 34:52
First of all, I think it's the ability to actually show that they can tokenize As digitised however we want to call it assets, be able to have very complex privacy models. When I think about capital markets, like if you just think about like we just launched a product in the life insurance, space, life insurance and annuities so effectively an entire admin platform for life insurance and annuities is running on Kenton, well, when a broker introduce, you know, a client into life insurance, well, they have a lot of visibility into the details of the client and all kinds of information. But once the underwriter decided to underwrite the contract, well, now suddenly, the broker has no pre v into the information of the client. So it's not only the fact that you can do things in a private manner, but it could also dynamically change throughout the lifecycle of the application. So that was the first thing that attracted them. But again, you know, when we talk to clients, you know, this direction of Canton network was always visible. And really what was interesting is, again, this ability to then eventually start interacting with one another, so that count on network will have a few payment providers, some of them will be completely private payments, some of them will be, you know, pseudo anonymous, like a stable coin. And they will actually be able to compose a transaction with a fully private regulated application. That is, for example, processing life insurance contract. And that is really what's getting these clients excited is that, you know, there's an ecosystem of like minded enterprises that do care about their regulators. They do care about doing things that protect their clients information. And now they have the ability again, to interoperate with one another. So I think that what you will see in the next half a year, as some of those more tread fire organisations, actually interoperate on a public chain Trad fie assets. And I think that this is what we've all been waiting for, at least in my opinion, and looking at what a lot of these permissionless chains have been trying to achieve in the last few years. So
Cuy Sheffield 37:11
for the next story, consensus, announces that the SEC closes the Aetherium 2.0 investigation. And so in 2023, reportedly, the SEC began investigating Aetherium alleging that the original token sale of ether was the issuance of an unregistered security consensus then sued the SEC on April 25, seeking to halt the investigation. And now with the latest statement from consensus, it appears that the investigation has been closed. So let me start with you, Simon, what's your perspective on the current state of Aetherium? Ether and some of the regulatory uncertainty? And does this change that, you know, with the SEC, reportedly backing off this investigation? The ETF coming up? Where do you see Aetherium? And what does that mean for financial institutions that are actively exploring it?
Sy Taylor 38:06
A theorem was always number two. And the big question about it was regulatory clarity, right, like So Bitcoin is number one, a theorems number two, is it going to get the on there's been a lot of applications for ETFs in that space, and a lot of people lining up at the door. And ultimately, no matter how something is brought into the world, if there is enough demand for the products, even if it's had some questions over how it started, I suspect that the market will end up deciding and the market has decided it wants this product. So that's kind of my read on it. Unfortunately, we in the US appear to have a legal system that doesn't neatly section things into buckets, it's been almost forced into dealing with risks through enforcement, actions, regulation by enforcement. But that's a risky strategy for regulators, because if they lose, then the lack of clarity continues. And now we have seen, there are a number of legislative moves and draft bills that people are trying to bring forward to try and bring that clarity. And I don't know, on the next episode, we'll have Chris Brahma who can talk about that an awful lot more. I'm interested you Well, do you have any thoughts on this one before we close out? Because this is an interesting space?
Yuval Rooz 39:22
I'm not aware of what Aetherium is. But jokes aside. Listen, this is really good news for the market. And Aetherium. I think that, you know, Aetherium has done a tremendous job building a community and a lot of people that are very excited about it. I will tell you that if Kenton was to build an atomic interoperability capability, it would be a theory um, so I mean, at the end of the day, when when you're thinking about who has the most assets on, it's a theory on but those again, for the most part are what I would call crypto type assets, not necessarily real world assets. And, you know, I still think that there's a lot for the two networks to do together. So kudos and good news for them.
Sy Taylor 40:07
Yeah, indeed, come clarity chi. Any thoughts on this one yourself? Yeah,
Cuy Sheffield 40:11
I think it's been interesting to see a number of large asset managers start to experiment with launching products on a theorem with black Brock's recent Biddle money market fund. And it feels like a lot of these approaches have been targeted towards crypto customers saying that, you know, there are a bunch of investors that are holding stable coins that aren't earning any yield, why shouldn't they hold a money market fun and be able to earn 5%? And so for that segment of meeting on chain capital, where it is, it seems like Aetherium has been attractive to some of those large tried fi players, I think the question will be for other use cases that are more in dread fi with trap fi customers, does Aetherium cross that chasm and isn't Aetherium itself isn't Nell two, they're still bunch of open questions on how that evolves. Yeah,
Sy Taylor 41:04
definitely want to get into some of those l tos and the rise of bass and everything else. Unfortunately, we are out of time. But we do fortunately, have many, many more episodes of this podcast coming in the near future. So thank you very much for listening. And thank you you vow for joining us. Thank you for talking us through kept on and being our guide in a lot of ways to the world of real world assets. Where can people find out more about you can't on network digital asset hit me with the links.
Yuval Rooz 41:32
So digital asset, the creators of the count on technology, you could find us a digital asset.com. And then as you said in the beginning count on network, it's Kent on dot network comm join the foundation. We're very happy to help people build and get the benefits of getting rewards from the network from building the next killer app. And Kai, how
Cuy Sheffield 41:53
about you on exit and LinkedIn at cash shuffle, and you'll
Sy Taylor 41:58
find me at sy Taylor on Twitter, I still can't call it x. It's the first time but said X. Yeah, it feels it feels wrong. It's still twisted to me. If you haven't already, go ahead and hit that subscribe button on Apple Spotify wherever you do. And if you enjoyed the show, leave us a review. It legitimately helps others find it. So like if you enjoyed this, go on right now and just write that review. And of course remember, this isn't financial advice. The content is for informational purposes. And whilst we've focused a lot more on the tokenization of real world assets, remember a lot of web three is underpinned by crypto and crypto can be volatile and you can lose money so be safe out there folks. Bye for now.