FAQ

Frequently asked questions

Why Canton Network?

• Granular privacy allows institutions to share relevant data on a need-to-know basis

• Traction from big banks like Citi, JP Morgan, clearing houses like DTCC, Euroclear, and government entities such as the European Investment Bank

Explain ETF share issuance process

• How do you configure your contracts to accept certain types of bonds and not others?

  • Rules are by instrument id

• Which party is the ‘executor’? As in, is there an intermediary party?

  • Custodian (eg. bank)

  • ETF Manager

What is the legal status of a “Tokenized ETF share” on Canton?

Underlying assets of ETFs are always CIP56 tokens that are “depository receipts” of real securities at a custodian bank. These are not considered a new security but rather a means of triggering share transfers at the custodian level.

• Can only be “transferred” to parties that clients of that custodian bank

• Follow same regulatory process as when transferring shares via custodian bank’s web portal or APIs

“Onchain ETF” itself can either be unregulated living as native onchain “baskets” or in the future file full ETF categorization by regulators.

Once ETF issued onchain, what is utility for buyside?

Clearly explain the utility to the buyer

Why buy Denote ETFs vs Traditional ETFs?

• Shape: Easy portfolio management between crypto & tradfi holdings with additional composability with DeFi.

• Nature: Access to exotic ETFs that do not exist in TradFi. Funds with private cred, private equity holdings. Fixed income ETFs with AI infrastructure bonds.

How are ETFs backed 1:1 with real securities?

Custodian bank issues “deposit receipts” that are transferable between institutional clients and represent direct share ownership.

How do you ensure reconciliation between custodian books and Canton ledger?

• Token transfers require signoff from custodian which settles at same time

  • Custodian approves ⇒ custodian agreed to transfer

  • Just like with current asset swaps, most likely assume T+1 or more settlement

• Future: the ledger will be the source of truth (have CSD on chain)

What happens if an AP tries to mint after cut-off time?

• Lifecycle operations are multi-party, require approval from ETF Manager & Custodian Bank

• Transaction can’t be submitted because other partners won’t approve