Rewiring Financial Markets: Transforming Wall Street with Blockchain Technology

For decades, Wall Street has run on highly fragmented financial plumbing.

Now everyday trillions of dollars in transactions face settlement delays as well as operational hurdles forcing institutions to lock up massive amounts of capital on their balance sheets simply to manage counterparty risk.

But the race to digitize and also modernize this critical infrastructure is rapidly accelerating.

Major financial players are now betting heavily on blockchain tech to tokenize.

Real world assets and also eliminate these inefficiencies.

Joining us live at the New York Stock Exchange to discuss the future of market plumbing as well as some of the dangers of silo blockchains is Mark Wendland, Chairman and CEO of Canton Strategic Holdings.

Great to have you here.

Thank you so much for joining me.

We're here at the New York Stock Exchange, and I do want to get your take on the financial plumbing.

We're seeing, so given the fact that we're seeing this merging of Trad with Define, tell us what needs to be done.

So I think about Canton as focused on rewiring our financial markets as today.

So there's been lots of talk of different blockchain projects throughout the years and all have been about more just replacing the market structure versus like we live in highly regulated markets today.

How do we adapt to them and come up with a blockchain that meets those needs and those requirements.

So first and foremost, most financial markets require some element of privacy, whether it's customer protection rules, bank secrecy, things like that.

And Canton the blockchain has an element of configurable privacy that meets those institutional demands that transact on NE, etc. every day.

And that's a requirement.

So that's kind of first and foremost is the privacy, but also the token economics policy and the governance structure is different than the other type of crypto projects that aren't always well understood.

But again, that's through years of talking to these regulated institutions on what their needs are.

But underlying is the technology that can reshape our financial markets. and we're talking about a highly regulated industry such as financial services, we know that there are protections in place for a reason here so why do you think it's so important to have a native design and what about privacy.

So I think if you think about configurable privacy, it benefits not only regulators.

There's been lots of different market events where regulators are piecing together bits of information using technology for the autonomous settlement reduces credit risk, but it also from a privacy element because you can make all the fields available to regulators, but just to the open public, you just know a transaction happened.

Price.

It doesn't disclose necessarily that it was two firms' names transacting, so it protects that IP.

It can allow those, but it is customizable and depending on the use case, each application that's building on top of it can choose which of those fields are appropriate.

So like transaction reporting, for example, that's very common and been around in our markets today, traditional markets for today.

It's an extension.

And I do want to get your take on walled gardens here.

So why do you think banks are so tempted to default to these siloed networks?

Well, it's, it's a step in the right direction.

So it's it's the fact that for years the regulatory environment from prior administration was so against some of these technologies, these disruptive technologies, and so that's turned into more of a tailwind.

And as they look to do that, the first.

I can control it, so that's the element of why the walled garden or the ecosystem within their four walls is attractive.

But the next step, the true benefit is where you can interoperate across those networks.

And so again, Canton is more of a network of networks and it allows you to build.

So yesterday was HSBC tokenizing deposits.

Here are all of these institutional partnerships that are being adopted.

The network effects associated with it.

So once you build the infrastructure that people can trust and then you can build upon that and cross over those different walled gardens, so to speak, and operate in a public blockchain like and I also want to get your take on tokenization of real world assets.

So this is something that we continue to hear about on a daily basis as well in the headlines and we have heard of partnerships.

Even with the exchanges in the US regarding the New York Stock Exchange as well as the Nasdaq, but where are we right now in the cycle and what is your estimates for adoption?

So we're in the early days, everyone's kind of developing what those projects New York Stock Exchange included and developing that will take time to roll out.

DTC got a no action letter to tokenize Treasury and so I think of those as key fundamental.

Steps and there's been again SEC giving a no action or permission to do pilot trades on top of it is a step in the right direction and you're going to see my prediction is you'll see adoption quicker than people exist.

If you asked me several years ago, I would have said this is going to take 10 years to kind of replace this.

It's not going to be right for everyone, but there are definitely your large, complicated multi-strategy.

Trading houses that are going to be attracted to mobilizing collateral, allowing them to recycle their risk faster trade more because you don't have these legacy systems that settle on a T+1 type basis so you're able to trade more and encourage more active markets and Mark less than 60 seconds here, but there's a fine line between regulation as well as innovation.

So here in the US, what do you think needs to happen.

So I think you know the US has laid down the groundwork for it.

I think the next step is to interoperate across different jurisdictions in coordination across whether it just be US markets.

I think it's taken a lead, Europe not as much, and so I think some of those fragmentations across the global markets are one of the next key innovations that will need to take place.

Mark, I appreciate your time.

Thank you so much for joining us here at the New York Stock Exchange.

Thank you.