Why Canton solves DeFi’s institutional privacy gap

Privacy and consumer protection are issues which frequently arise for financial institutions considering blockchain technology. Designed specifically to address the barriers preventing traditional finance from moving on-chain, the Canton Network directly tackles the privacy gap and provides an operating environment compliant with regulations. 

This article explains the difference between permissionless and permissioned blockchains, as well as public versus private data.

Who can participate in blockchains and view their data

There is no single privacy setting that applies universally across blockchains. Instead, privacy exists on a spectrum shaped by two elements: who is allowed to join a blockchain and who can view its data.

Participation can be fully open to everyone (permissionless) or restricted (permissioned).

• Permissionless blockchains like Ethereum and Solana, maximize openness and liquidity, making all data publicly visible. 
• Permissioned networks function more like an intranet, limiting access to authorized parties and offering built-in controls for sensitive information. 

While many institutions experiment with public chains, permissioned environments make regulatory compliance significantly easier.

Data visibility represents the second dimension. Public chains expose all transactions, whereas private chains restrict visibility to network participants. Most financial institutions require a middle ground: the ability to selectively disclose information, maintain auditability, and coordinate with partners without revealing confidential data.

Meeting institutional needs around on-chain privacy 

For much of the past decade, privacy limitations kept blockchains at the periphery of traditional finance. Public chains are too transparent for sensitive client data, and early privacy-focused chains lacked interoperability or industry adoption. 

However, the benefits of blockchain (faster settlement, lower costs, and improved asset mobility) have become impossible for financial institutions to ignore. Over the past year, banks, asset managers, and infrastructure providers have begun migrating targeted workflows on-chain. Privacy has become a decisive enabling factor, with new architectures delivering the selective confidentiality required by regulated firms. 

Networks like Canton now offer this “privacy sweet spot,” unlocking institutional participation without sacrificing compliance.

How can Canton bridge the privacy gap?

Canton, built by former Goldman Sachs and DRW engineers, provides a privacy-preserving foundation that eliminates the traditional trade-off between transparency and isolation. It operates as a network of networks: each participant runs its own customizable intranet, with governance controls, access parameters, and privacy settings, similar to a bank maintaining sensitive customer data on a secured internal system. These intranets remain interoperable through Canton’s Global Synchronizer, enabling institutions to exchange assets and data without exposing private information. 

Despite launching recently, Canton already processes more than $100 billion in daily repo flows¹ – clear evidence of institutional demand. Major firms Goldman Sachs, BNP Paribas, Microsoft, Deutsche Bank, Circle, and Polychain^2,3,4 serve as validators, users, and investors.

Canton Coins are designed to boost network security

The network’s native token, Canton Coin (CC), underpins both economic activity and security. Instead of paying subscription fees in fiat, institutions pay usage fees in CC to access settlement rails and infrastructure. Network operators (primarily regulated institutions) validate transactions and enforce permission rules. They earn newly minted CC for reliability and capacity, while penalties apply for downtime or misconduct. A portion of all fees is burned, reducing supply as usage increases; over $110 million in CC has already been removed from circulation. 

The case for Canton

Canton targets one of the largest long-term opportunities in crypto: the tokenization of traditional assets, a market estimated $10-$30 trillion over the next decade. The network already settles more than $4 trillion in annual tokenized volume, yet its valuation remains a fraction of comparable public chains. 

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Its price-to-TVL ratio of roughly 0.01x suggests investors pay only one cent for every dollar of on-chain assets, far lower than Ethereum or XRP.

This valuation gap persists despite accelerating institutional adoption. Canton solves the core barriers institutions face on public blockchains: privacy, compliance, and deterministic settlement. As tokenization expands and financial institutions bring more workflows on-chain, networks designed for regulatory-grade security and privacy are positioned to capture the majority of market share.

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Footnotes: 

1. Canton Network. “How Canton Network Delivers Institutional-Grade Privacy.” Canton Network Blog, https://www.canton.network/blog/how-canton-network-delivers-institutional-grade-privacy
2. Canton Network. “Goldman Sachs, Microsoft and Deutsche Bank Are Testing Canton Network.” https://www.canton.network/news/goldman-sachs-microsoft-and-deutsche-bank-are-testing-canton-network
3. Canton Network. “How Canton Network Delivers Institutional-Grade Privacy.” Canton Network Blog, https://www.canton.network/blog/how-canton-network-delivers-institutional-grade-privacy
4.  CryptoRank. “Digital Asset ICO Overview.” CryptoRank.io, https://cryptorank.io/ico/digital-asseton

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