Banks navigate the network using competing models that take different approaches to enforcing financial rules.
On the one hand, there are blockchain-native developers, such as Matter Labs co-founder Alex Głuchowski, who argue that financial systems require rules to be enforced among all participants. On the other hand, there are networks built for institutions like Canton that prioritize privacy, control, and interoperability over global health.
Glukhovsky is one of the most vocal critics of this second approach, arguing that it recreates the limitations of customary finance in a up-to-date form. The crux of the criticism is whether the rules can be enforced across the entire network. He argued that this was not possible in systems such as Canton.
“But they are possible with blockchains – particularly with zero-knowledge systems anchored in public blockchains like Ethereum, which is an environment that can be trusted by all parties because it cannot be captured by any single corporate interest,” Glukhovsky told Cointelegraph.
The institutional adoption of cryptocurrencies brings banks and financial institutions online, but it also divides the industry along deeper fault lines than geography or regulation.
Canton made the top 21 cryptocurrencies list despite criticism from decentralization purists. Source: CoinGecko
What counts as blockchain?
Canton has gained traction by focusing on privacy and regulatory requirements, connecting banks and asset managers through a network where transactions are shared only with the relevant counterparties rather than broadcast throughout the system. 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 intended to guarantee.
For Głukhovsky, the basic feature of blockchain is a single shared ledger that allows rules to be enforced against all participants simultaneously. He argued that Canton was ineligible. The network connects institutions through bilateral or trilateral relationships, where each party sees and verifies the transactions in which it is directly involved.
“Before blockchains existed, banks had to enter into bilateral relationships and define how they deal with edge cases through contracts and API interactions,” Głuchowski said. “Just take existing relationships and workflows and tokenize them.”
Glukhovsky said Canton’s model limits what the system can guarantee. While participants can verify transactions in which they are directly involved, they cannot independently verify system-wide properties such as the total supply of assets or other policies that apply to all users. He added that these types of guarantees require a common status that everyone can check.
The Digital Asset co-founder details how Canton differs from legacy systems in practice. Source: Saul Kfir
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“[Gluchowski] is right to say that Canton does not have a common global state, but is wrong to suggest that this has a negative impact on Canton’s trust model,” replied Shaul Kfir, co-founder of Digital Asset, in a statement shared with Cointelegraph.
“On Canton, as on all other blockchains, I only trust my own validator and assume that any other validator may 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 the independent control of each party to the transaction in which it is involved.
Network rules interfere with publisher control
After talking to Cointelegraph, Głuchowski took part in, among others, live debate with fellow Digital Asset co-founder Yuval Rooz. He repeated his argument that financial rules must be enforced across the entire blockchain network.
Rooz responded that system-wide enforcement does not eliminate reliance on trusted parties because users of the public blockchain are still dependent on token issuers. Rooz pointed to hacks that involved assets like USDC to argue that issuers remain a key enforcement mechanism.
The industry has repeatedly called on Circle to freeze the stolen funds before illicit participants convert them into decentralized assets. Source: ZachXBT
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“We would actually be happier – as we’ve seen much of the crypto space say – if a centralized issuer had intervened earlier, rather than allowing these assets to be traded and turned into permissionless assets, where they then can no longer interfere,” Rooz said.
“In Canton, as in other public networks, the issuer is concentrated in real assets and these have different or similar properties to those they would have in permissionless public networks,” he added.
Glukhovsky argued that emission limits could be embedded directly in smart contracts. On networks like Ethereum, he said, activity above a certain threshold could be restricted or require additional approval, rather than relying solely on the issuer’s infrastructure.
“In Canton, you rely solely on multisig. In Ethereum, you rely on clever contracts enforced by the network,” Glukhovsky said.
“That’s just not true,” Rooz replied.
Kfir, whose statement was shared with Cointelegraph after the live debate, said Glukhovsky was “confusing Canton’s capabilities” with its use by centralized RWA issuers.
“When there is a centralized RWA issuer, such as a stablecoin issuer, you are already entrusting them with the mint function and trusting them and their auditors that the on-chain amount is backed by off-chain reserves,” Kfir said.
Competing visions of bringing banks online
Canton and Matter Labs are competing to solve the same problem of how institutional finance flows on-chain. Matter Labs, the creator of ZKsync, is targeting institutional use cases with Prividium, a model that ensures transaction privacy while anchoring verification in Ethereum through zero-knowledge proofs.
Kfir argued that systems like Prividium risked concentrating trust elsewhere. In his opinion, users no longer check the appropriate status on their own, which forces them to reconcile their own records with what the operator believes took place on the network.
“ZKsync relies on Prividium operators to create ZKP, but ZKsync’s own open-source client does not verify this evidence,” he said. “Even if the user validates, it does not check which clever contract logic is running. The user is completely at the mercy of the Prividium operator.”
Glukhovsky defended ZK’s technology in a February social media exchange with Rooz. Source: Alex Głuchowski
However, Rooz admitted during the debate that Canton is not subject to public verification, and added that it is planned to introduce such an option in the future.
For now, the division remains unresolved. Canton relies on privacy and institutional control, while Prividium ZKsync tries to retain these features while anchoring verification to the public network. Both claim to offer a viable path to bringing banks online, but they are based on fundamentally different assumptions about how financial systems should work.
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