Banks are moving onchain through competing models that take different approaches to how financial rules are enforced.
On the one hand are blockchain-native builders like Matter Labs co-founder Alex Gluchowski, who argue that financial systems require rules to be enforced across all participants. On the other are institution-led networks like Canton, which prioritize privacy, control and interoperability over global state.
Gluchowski is among the most vocal critics of the latter approach, arguing it reproduces the limitations of traditional finance in a new form. The core of the critique is whether rules can be enforced across an entire network. That’s not possible in systems like Canton, he claimed.
“But they are possible with blockchains — specifically with zero-knowledge systems anchored to public blockchains like Ethereum, which is an environment all parties can trust because it cannot be captured by any single corporate interest,” Gluchowski told Cointelegraph.
Crypto’s institutional adoption is bringing banks and financial institutions onchain, but it’s also splitting the industry along a deeper fault line than geography or regulation.
What counts as a blockchain?
Canton has gained traction by targeting privacy and regulatory requirements, connecting banks and asset managers through a network where transactions are shared only with relevant counterparties rather than broadcast system-wide. The network includes institutional participants such as JPMorgan and Goldman Sachs.
Whether Canton counts as a blockchain depends on how the term is defined and what properties it is expected to guarantee.
For Gluchowski, a blockchain’s core feature is a single shared ledger that allows rules to be enforced across all participants at once. He claimed Canton does not qualify. The network connects institutions through bilateral or trilateral relationships, where each party sees and verifies the transactions it is directly involved in.
“Before blockchains, banks had to enter bilateral relationships and define how they handle edge cases through contracts and API interactions,” Gluchowski said. “It’s just taking these existing relationships and workflows and putting them into a tokenized form.”
Gluchowski said Canton’s model limits what the system can guarantee. While participants can verify the transactions they are directly involved in, they cannot independently verify system-wide properties such as total asset supply or other rules that apply across all users. He added that those kinds of guarantees require a shared state that everyone can check.
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“[Gluchowski] is correct that Canton does not have a global shared state, but he is incorrect in implying that this negatively affects Canton’s trust model,” Shaul Kfir, co-founder of Digital Asset, responded through a statement shared with Cointelegraph.
“In Canton, as in all other blockchains, I only trust my own validator and assume anyone else can be malicious. This ‘don’t trust, verify’ approach is very different from a distributed API system,” Kfir added.
In Canton’s model, trust does not come from a single system-wide view, but from each party independently checking the transactions it is involved in.
Network rules clash with issuer control
Following the conversation with Cointelegraph, Gluchowski took part in a live debate with another Digital Asset co-founder, Yuval Rooz. He reiterated his argument that financial rules must be enforced across an entire network in a blockchain network.
Rooz countered that system-wide enforcement doesn’t eliminate reliance on trusted parties, as public blockchain users still depend on token issuers. Rooz pointed to hacks that involved assets like USDC to argue that issuers remain the key enforcement mechanism.
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“Actually, we would have been happier — as we’ve seen a lot of the crypto space saying if the centralized issuer were to intervene sooner rather than allowing these assets being traded and swapped into permissionless assets where then they can no longer interfere,” Rooz said.
“On Canton, no different than any other public chain, the issuer is centralized in real world assets, and they have different properties or similar properties to what they would have on public permissionless chains,” he added.
Gluchowski argued that issuance limits can be embedded directly into smart contracts. He said that on networks like Ethereum, activity beyond a certain threshold can be restricted or…
cointelegraph.com