Canton is built for regulated finance, which makes it attractive to banks, asset managers, and market infrastructures. But translating that regulated design into real-world compliance with frameworks like GDPR, MiCA, or SEC rules can still feel messy.
Legal reviews, jurisdictional conflicts, and operational overhead often slow or stall otherwise promising Canton initiatives.
Compliance Pitfalls in Canton Implementations
Canton’s decentralised model spreads responsibility and data across multiple participants. At the same time, its partitioned, permissioned domains let institutions tightly control which validators hold which personal data and in which jurisdictions.
That is powerful for resilience and regulatory alignment, but it shifts the challenge towards coordinating consistent, end‑to‑end audit views across multiple parties and systems.
For example, different validators may hold only partial views of transactions, which means that GDPR “right to be forgotten” workflows and country-specific data residency controls must be designed at the application and governance layers, rather than being assumed from the ledger alone.
Institutions need to show not just that transactions are valid, but that they can trace who did what, when, and under which policy—without undermining privacy or sovereignty. Getting this wrong risks inconsistent reporting, audit gaps, and tension between local regulators who interpret global standards differently.
Meeting Global Regulatory Expectations on Canton
Regulated institutions must be able to produce verifiable histories of activity on demand, while still keeping sensitive data restricted to those who genuinely need to see it. That means combining Canton’s selective disclosure capabilities with clear policies on retention, pruning (removing or archiving data), and role-based access.
For securities and derivatives workflows subject to SEC or MiFID-style rules, the key is to ensure that transaction records are immutable for evidentiary purposes, yet still structured so that different stakeholders see only the information relevant to them.
In practice, this requires standardised logging, consistent identifiers across systems, and an architecture that supports both global oversight and local compliance.
Handling Canton Audit and Reporting Demands
For many non-crypto-native teams, the hardest part of Canton will be the audit and reporting expectations. Internal and external stakeholders expect familiar artefacts such as dashboards, reports, and exportable logs, that can be ingested into existing governance, risk, and compliance tools.
Without a clear operating model, teams end up building one-off scripts to reconcile node data, transaction views, and off-chain records. This is time-consuming, error-prone, and hard to maintain as Canton applications, subnets, and participants evolve.
Why Canton Operations Strain Enterprise Resources
Canton’s strengths include atomic settlement, composability across domains, and support for complex post-trade workflow; however, these strengths also increase operational demands.
Operations teams must manage validator nodes, synchronisation domains, monitoring, upgrades, and bridges to legacy infrastructure, often across multiple time zones and business units.
If validators are not configured and maintained correctly, costs can escalate quickly through unnecessary infrastructure, duplicated environments, and downtime during upgrades. The net effect is that specialised Canton knowledge becomes a bottleneck, and operational risk rises just as transaction volumes and regulatory scrutiny increase.
How Blockdaemon Simplifies Canton Compliance and Operations
Blockdaemon’s Canton solutions give institutions a more predictable path through these regulatory and operational challenges.
Blockdaemon Institutional Vault provides structured, exportable logs and audit trails that align with frameworks such as SOC 2, helping compliance and risk teams generate consistent evidence without sacrificing the benefits of decentralisation.
Example: Full Audit Trail for Vendor Payment
In the previous blog in this series, Sam, our Acme Bank accountant, payed a vendor 5,000 USD equivalent in Canton. Thanks to Blockdaemon Institutional Vault, there is a full audit trail covering every step in this process, from Sam’s initial login through to the cryptographically enforced policy decision and final transaction.
On the operational side, Blockdaemon’s white-label Canton infrastructure takes over node deployment, monitoring, and upgrades, applying best practices so that institutions do not need to maintain deep in-house expertise for every validator.
When combined, these services let you meet global regulatory expectations, manage audit demands, and scale Canton-based workflows while keeping your internal teams focused on product, clients, and growth rather than infrastructure management.
Check out the other blogs in this series:
