A titanic change is potentially taking form in the financial scene. Digital Asset, a young company focused on blockchain solutions for business, just closed a massive $135 million round of funding. This Series A investment was led by DRW Venture Capital and Tradeweb Markets. It drew participation from some of the largest financial institutions including Goldman Sachs, Citadel Securities, and BNP Paribas. This isn’t just another funding announcement — it’s a strong signal that large institutions are starting to take blockchain technology seriously.

Digital Asset’s Co-founder and CEO, Yuval Rooz sees this milestone as tremendous validation for the inevitable incorporation of blockchain technology into institutional finance. The investment underscores the rapidly growing demand for institutional-grade blockchain solutions. Companies like Digital Asset are rising to the occasion. They offer the connective tissue necessary to reconcile blockchain’s radical promise and the immutable compliance expectations of the legacy financial universe.

Our plan with the funding is to accelerate the onboarding of real-world assets (RWAs) onto the Canton Network. This network is Digital Asset’s privacy-enabled blockchain, purpose-built for regulated financial institutions. This first implementation shows a huge institutional appetite for using blockchain to tokenize RWAs and manage them on-chain. From traditional finance investors to crypto-native firms— including Polychain Capital, Circle Ventures, and QCP— the two worlds are coming together. This unique collaboration showcases the increasing overlap of these historically distinct fields.

What is the Canton Network?

The Canton Network is a permissioned, privacy-enabled blockchain network built only for regulated financial institutions. This enables these institutions to experimentally develop and deploy their own interoperable applications in a secure and compliant manner. Goldman Sachs and BNY Mellon are just two of the heavy hitters currently beta testing the Canton Network. Specifically, they’re testing them across 11 different use cases. These tests are intended to show the promise of blockchain technology. They also caution that it will be instrumental to ensuring that as our financial system changes, it changes for the better.

Now, the Canton Network is being used to tokenize real-world assets like bonds, Eurobonds, even gold. Euroclear and Digital Asset are working on a pilot project to tokenize gilts, Eurobonds and gold on the network. The Hong Kong Monetary Authority has investigated bond tokenization on the Canton Network. As a result, Hydra X has become the first custodian in APAC to offer custody for Canton Coin. This Legendary coin is the native payment application under Canton Network.

There are many benefits to tokenizing real-world assets. Fractional ownership, as one potential improvement, can significantly boost liquidity in typically illiquid assets such as real estate. Investors can buy and sell tokens representing partial ownership quickly and easily, opening up new investment opportunities and unlocking capital. Blockchain technology and smart contracts streamline the transaction process, reducing the need for intermediaries and enabling a 24/7 global market for tokenized assets.

Challenges and Opportunities for TradFi and Crypto

TradFi interest in blockchain and DeFi is rising, opening exciting new doors while raising big question marks. Yet, TradFi institutions must tread carefully into new technologies. They need to pursue industry-relevant regulatory clarity without trampling on the decentralized ethos that continues to define the crypto space. These TradFi institutions are both competing with and deepening their ties to the crypto ecosystem. This new increase creates a danger that the sector could be subjected to the very bureaucratic and operational constraints it first sought to avoid.

TradFi institutions are starting to feel pressure to catch up. They’re facing pressures such as unacceptable fees, cumbersome bureaucratic processes, and an increasing sense that they are losing the innovation race. Working blockchain and DeFi solutions into their current systems may be the easiest aspect, but it’s still one of the biggest challenges. Yet the entire crypto sector is under tremendous regulatory assault. Continued hearings, lawsuits, and the time-consuming process of passing new legislation cast a shadow of doubt over TradFi institutions itching to join the space.

Even with the challenges above, real-world asset tokenization is still incredibly powerful. This opens up the possibility to dynamically create completely new financial assets leveraging both standard technology and blockchain-based technology. Essentials MakerDAO, a prime example of the crypto ecosystem’s innovation, employs real-world asset collateral to back its stablecoin DAI. Tokenization lends itself to creating digital proof of ownership for analog assets. Innovations such as DECO, a new oracle protocol with privacy-preserving properties, can allow verification of ownership of tokenized real-world assets without revealing the holder’s information. ANZ Bank demonstrates the power of Chainlink CCIP by completing a cross-currency, cross-chain purchase of tokenized assets. This shift exemplifies how tokenization can enhance operational effectiveness.