The emergence of digital markets signifies a transformative leap in financial ecosystems. This journey–built upon the foundation of asset tokenization, smart contract innovation, and synchronized multi-party workflows–has unfolded progressively over the last two years. It is not a series of isolated transactions, but a deliberate and interconnected development that has established the foundation for a cohesive, efficient, and inclusive digital marketplace. As the Canton Network continues to advance in its scope, capabilities, and adoption, early movers and innovators in the digital ecosystem are playing a critical role in demonstrating the growing momentum and possibilities.

Establishing Digitally Native Instruments

The foundation of digital markets began with tokenized asset creation and registration. By embedding the rules, lifecycle events, and data directly into the asset, tokenization offers unmatched transparency, capital efficiency, operational cost-savings, and enhanced mobility- all with the goal of improving liquidity.

Platforms such as HSBC Orion, Goldman Sachs’ GS DAP, BNP Paribas Neobonds and Broadridges’ DLR, all built on Digital Asset’s Daml are at the forefront, demonstrating how digital advancements can enhance the security and efficiency of capital markets. Notable firsts include: 

Project Venus: EIB’s Landmark Digital Bond Issuance  

The European Investment Bank (EIB) advanced the digitalization of capital markets with Project Venus, its first entirely digitally native bond issue. Executed in November 2022, this initiative involved the issuance of €100 million digital bond, executed in collaboration with Banque de France and Banque Centrale du Luxembourg, and executed under Luxembourg law. The bond was issued on Goldman Sachs’ GS DAP tokenization platform, marking the first in achieving same-day settlement. Project Venus also gained distinction as the first syndicated digital bond by a public institution listed on the Luxembourg Stock Exchange’s Securities Official List. Utilizing the Common Domain Model for interest rate swaps, this issuance took the initial steps toward harmonizing data structures in finance.

KfW’s Digital Bond first on Deutsche Borse’s D7 Platform

KfW’s first issuance of a digital bond on the D7 platform in December 2022 represented a significant leap in the integration of blockchain technology into Germany's financial markets. This €20 million bond was launched under the then newly enabled eWpG legislation, which supports digital securities. Managed through Deutsche Borse’s D7 platform and executed by Clearstream, the bond was stored in a central securities depository (CSD).

Cross-Border Activity: Expanding Digital Horizons

Once the feasibility of tokenized asset creation was demonstrated, the market responded in kind with various use cases- the first of which was cross-border possibilities. The potential to seamlessly integrate systems opens the door to enable trades across jurisdictions, break down market silos, and reduce delays. Examples of this innovation include:

EIB’s first digital bond issued in British Pounds

The European Investment Bank (EIB) further advanced tokenized issuances, with the first-ever cross-border digital bond issued in GBP. In February 2023, the EIB launched a £50 million digital bond using blockchain technology, marking a significant milestone in demonstrating how digital instruments can facilitate seamless cross-border purchase and sale activity. The bond was issued on HSBC Orion in collaboration with leading financial institutions BNP Paribas and RBC Capital Markets. The EIB has since launched two separate tokenized bond issuances in November 2024, each valued at €100 million. This first issuance was facilitated by HSBC’s Orion platform, while the second utilized GS DAP in conjunction with DL3S, the tokenized cash solution by Banque de France.

The Republic of Slovenia’s digital bond

The Republic of Slovenia’s digital bond issuance marks a significant step forward in the integration of blockchain technology into its central government debt management and financial markets at large. The €30 million bond was issued under the European Central Bank’s (ECB) wholesale central bank money (CeBM) settlement experimentation program, and its settlement was performed on-chain using wholesales Central Bank digital money through the Banque de France’s (BdF) interoperable and tokenized cash solution (DL3S). BNP Paribus facilitated this innovative transaction through its Neobond platform, developed with Digital Asset’s Daml and leveraging Canton blockchain.

HSBC's Digital Note Issuance on DLT

In October 2023, HSBC issued a HK$1 billion one-year digital note using distributed ledger technology (DLT), marking the first digital note listed on the Hong Kong Stock Exchange by a Hong Kong company under English law. Utilizing the HSBC Orion DLT platform and settled via the Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority, the issuance demonstrated how the entire bond lifecycle—including issuance, settlement, and maturity—could be digitized. By integrating with existing CMU systems, the bond was accessible to both DLT participants and conventional investors, addressing liquidity concerns and setting a precedent for advancing digital finance in Hong Kong.

Catering to Complexity: Driving Sustainable Financing and Multi-currency and Multi-Investor Issuances

Yet another example of this sustained momentum has been the application of this technology into “green financing.” Digital markets have embraced Environmental, Social, and Governance (ESG) principles by enabling innovative digital instruments that tie sustainability goals to tokenized assets. In addition to the ESG benefits, as the complexity of these investments has increased, tokenized markets have begun to support financial instruments that cater to diverse investors and currencies. By enabling multi-currency transactions and broadening investor participation, this issuance improved market liquidity and underscored the potential of digital bonds to create a more accessible global financial ecosystem. Key financial institutions that have been first-movers in this space include:

Hong Kong’s Tokenized Green Bond

The government of the Hong Kong Special Administrative Region (HKSAR) introduced its inaugural tokenized green bond in February 2023. This HK$800 million issuance marks the world’s first government-issued tokenized green bond, integrating ESG objectives with leading technology. Utilizing Goldman Sach’s GS DAP platform, and settled via the Central Moneymarkets Unit (CMU) of the Hong Kong Monetary Authority (HKMA) (with linkage to Euroclear and Clearstream), the bond demonstrates how the entire lifecycle-including issuance, settlement, and maturity, can be digitized. This transaction set a precedent for leveraging technology to advance sustainable finance globally.

Issuance of Multi-investor and Multi-currency Digital Bond

Expanding from their initial offering, in February 2024, the HKSAR successfully issued HK$6 billion worth of digital green bonds denominated in multiple currencies - HKD, RMB, USD, and EUR. This landmark issuance, facilitated by the HSBC Orion platform, not only marks the world’s first multi-currency digital bond but also the first native bond issuance in Hong Kong. The multi-currency digital green bond attracted a wide range of institutional investors globally.

Secondary Market Liquidity: The Digital Marketplace Matures

Building upon this foundation of primary issuance, cross-border activity, and multi-currency capability, we now see the market pivoting towards enhancing liquidity in secondary trading. This not only opens the doors for a whole new range of participants, such as market makers. It moves the industry closer to the goal of digitizing the entire investment lifecycle, whereby tokenized assets can move in the same way that non-tokenized assets do, but with improved speed, efficiency, and transparency. This opens the doors for improved liquidity, reduced market constraints, and a range of new investment possibilities.  

Transacting $1.5 trillion in repo per month 

Broadridge’s Distributed Ledger Repo (DLR) system significantly enhances secondary market liquidity and processes repo transactions for 20 of the 24 primary dealers in the US. By automating end-to-end repo services, the DLR facilitates the simultaneous settlement of cash and securities, significantly reducing risks and capital costs. This approach has transformed the repo market, traditionally laden with inefficiencies and risks, into a more secure and streamlined ecosystem. The substantial growth in transaction volumes, from $50 billion to $1.5 trillion per month in just two years, highlights the transformative impact on market participation. This surge underpins the powerful capabilities of distributed ledger technology to revolutionize financial markets. 

Industry leadership and evolution: Goldman Sachs pioneers industry-wide platform ownership 

As digital markets continue to evolve, industry leaders are not only participating but also shaping the future landscape. A pivotal development in this journey is the recent announcement of Goldman Sachs’ decision to spin off its GS DAP platform as an industry-owned entity. This strategic move exemplifies how core platforms can drive broader adoption and integration across the digital capital markets. 

This move by Goldman Sachs marks a significant evolution in digital market infrastructures, setting a precedent for platform maturity and collaborative growth. By transitioning GS DAP to industry-wide ownership, the initiative encourages a collective advancement among financial entities, leveraging the strengths of blockchain technology to foster a more decentralized and democratized financial ecosystem. 

Delivering a distributed technology solution to a wide cross-section of financial market participants has the potential to redefine market connectivity and unlock new commercial opportunities.

Mathew McDermott,

Global Head of Digital Assets at Goldman Sachs

Financial markets: the cusp of a new era

In conclusion, the evolution of digital markets over the past two years reflects a transformative journey from foundational innovations to widespread industry adoption. Starting with the establishment of digitally native instruments, the market progressed to embrace cross-border activities, sustainable financing, and multi-currency issuances, each step building upon the last. The maturation into enhancing secondary market liquidity signifies not just technological advancement but a fundamental shift toward digitizing the entire investment lifecycle. Pioneering efforts by industry leaders, such as Goldman Sachs’ move to industry-wide platform ownership, underscore a collective commitment to efficiency, transparency, and inclusivity. 

With the go-live of the Canton Network in July this year, the financial ecosystem stands on the cusp of a new era of connected capital markets. The Canton Network plays a pivotal role in creating seamless connectivity, fostering synchronized multi-party workflows and industry-wide interoperability. This development not only enhances efficiency and transparency but also paves the way for a more integrated and inclusive global financial market.