Canton Strategic Holdings, Inc. Common Stock Investor update

Good morning. Welcome. Thank you all for joining for the Q3 Canton Network Ecosystem webinar. Hopefully, you have all seen our report that we published last week, and we look forward to the discussion today. Without further ado, I will turn it over to Mark Toomey.

Thanks, everybody. Thanks, Mark. Mark Toomey, President of Canton Strategic Holdings. I am going to do a quick recap of our report and go through some slides. We will go to slide 2 right now. Institutional adoption. Institutional participation on Canton continues to strengthen as more key infrastructure goes live. We have seen many organizations positioning ahead of the important October DTCC rollout. The DTCC pilot was completed July 15, 30-plus firms. Full rollout is expected in late October. Just this past month, RivNext executed the first on-chain OTC total return swap on Canton. We have had, in Q3, six new Super Validators, a16z crypto, LSEG, Marex, Paxos, Shinhan Asset Management, and TreasurySpring. As the network continues to grow, the new Super Validator Accountability Committee was created to ensure Super Validators stay on track to deliver on the milestones they have committed to bringing to Canton. The foundation now has over 100 members.

ISLA and ISDA are notable new joiners working to establish legal and operational standards for sec lending initiatives on Canton. Initiatives that bring collateral on-chain are progressing globally. Our report highlights some notable developments in the U.K.'s government sovereign issuance program. One, the Digital Gilt Instrument pilot, AKA DIGIT, issuance is happening no later than Q1 2027. Two, the Bank of England's commitment to make DIGIT eligible as collateral in its market operations. Several Canton eco participants will play an important role in this initiative. It builds on groundwork laid by the Canton Industry Working Group from their first tokenized intraday gilt repo on Canton in January. This working group includes LSEG, TreasurySpring, Lloyds, Archax, Euroclear, and DA, among others. Another Canton participant, HSBC Orion, won the mandate to be the platform for DIGIT issuance. Slide 3. Network activity. We are seeing more apps and tokenized tools to issue assets coming onto Canton, which means more dollar liquidity coming natively on Canton to support activity.

While network stats show less activity this quarter, we attribute this to continued optimization and process adjustments by applications from CIP-104 related tokenomics changes. Some takeaways from this report. Milestone trade, Virtu, Tradeweb, and M1X Global completed first of its kind repo trade on the Canton Network. This was completed fully on-chain. The collateral they used was USDM1, the digital bond issued natively on Canton by the Republic of the Marshall Islands and fully backed one for one by short-term US Treasuries. What this shows is that native on-chain sovereign issuance can produce an instrument that works with the existing workflows. A few exciting launches and announcements for new assets on Canton this past quarter.

USYC is Circle's tokenized money market fund, and USDM1, World Liberty Financial stablecoin. A suite of infrastructure solutions to support tokenization efforts also for TradFi institutions is expanding. Broadridge launched DLX, allowing banks and broker-dealers to issue and service tokenized bond and equities on Canton and plug into DTC's upcoming launch. Next slide. Iterative governance. Canton governance very focused on aligning and improving long-term economic incentives for network participants. This iterative approach to CIP-104 implementation and the pipeline of proposals will be critical for the tokenomics and governance framework. Some takeaways from the report. Progress is being made towards the full go live of CIP-104, which will tie rewards to activity, best expressed by the amount of CC burned. Measuring verified traffic on-chain is a much more automated and accurate approach versus a legacy marker system. It closes the gap between reported activity versus real activity.

Our report also highlights 2 very important CIPs that we've been closely monitoring. Universal Burn CIP, and very importantly, this CIP actually just passed, was approved this morning. It addresses network fees and rewards across both Global and private synchronizers, AKA subnets. Today, traffic on the Global Synchronizer burn CC and earns rewards for the apps and validators that generate it. Currently, traffic on dedicated synchronizer subnets has been paid through license fees and does not burn CC or generate CC rewards. This new proposal sets the standard that the value of activity on all kind of synchronizers is burned, and more activity feeds the same rewards pools. It's a very important change, especially with regards to BME, burn and mint equilibrium. To recap BME, 1 means the network burn versus mint is at equilibrium. Below 1 indicates an inflationary state. Above 1 indicates a deflationary state.

In Q3, the average BME was 569. Second CIP we've been tracking is weighted CIP voting. This CIP proposes an evolution to the Super Validator governance voting model. The goal here is to increase governance participation, and it ties voting weight to locked token balances. It builds on the long-term alignment framework that was established under CIP-105. It's important to note, weighted CIP voting is still in discussion. The framework described is subject to change, and approval is dependent on Super Validator affirmative votes. Moving into the meat of our conversation. For most of the last year, the market has been completely focused on Clarity. But even without that legislation, the SEC regulates securities, and the CFTC regulates derivatives. There is certainly a path toward an improved regulatory framework in the U.S.

I'd like to welcome Joris Delanoue, CEO of Firmint, as well as Mark Wendland, Chairman and CEO of Canton Strategic Holdings, to join me for a discussion on the path forward for digital asset regulations in the U.S., how the Canton Network fits within the latest regulatory framework. Mark and Joris, thanks for joining.

Thanks, Chris. Hey, Mark. Hi, Mark.

Thanks, guys. Good to see you guys. Let's dive in. As I mentioned, the idea of Clarity has been consuming the regulatory conversation here in the U.S. within digital assets and blockchain industry over the last year plus. With the failed vote in the Senate, which wasn't a surprise, we're back to a regulatory framework that will be governed by the SEC and CFTC rather than Congress. Mark, let's start with you. What have you been paying attention to when it comes to how institutions, both on the TradFi and the DeFi sides, have been interpreting the failure of Clarity? How are they looking at the path forward?

Yeah, there's been so much focus on the Clarity Act, you can often get lost in what we've actually witnessed over the last year plus. I think it's important to kind of like, let's just rewind and look at what we've seen from I'll start with U.S. regulators, but this isn't just a U.S. story. This is frankly a global story that you're seeing. For me, I obviously look back in December of 2025, what you got from the SEC in a no-action letter to DTC and what that means for bringing tokenized assets on chain to U.S. markets. It allows for US Treasuries, which is the largest government bond market in the world. I don't know what the current tally of outstanding debt, but I don't think it's shrinking anytime soon. It's north of $40 trillion, so it's massive size of what's able to do.

We talk about a ton of aspect of mobilizing collateral and what that means. Today, we are going to talk more about some of the equity market structure. You saw a signal from that. What that means to me is while Clarity did not pass, you continue to see that regulators are going to continue to do what their mandate is, regulate securities markets in the U.S., regulate derivatives markets as it relates to the CFTC, and they are going to do that. The difference between an act of legislation by Congress is it allows more stickiness, as it is harder to repeal something like that, where a new commissioner, a new agency lead and change in administration can repeal some of the activity, but it is not something that can happen overnight. I am sure we will get into some of more of that in some of the later questions.

I really think we missed some of the signals that we have been seeing, this momentum that has been building towards embracing this technology and laying down the groundwork for ways that these innovative technologies can move onshore. Again, we focused a ton of activity on collateral mobility, and today I think we are going to talk a little bit more about the equity market structure and some of the exciting developments we have seen from the agencies there.

Yeah, great point. I think it is important to get as much done the industry in the next two years, prior to 2028. If there is a regime change, whatever, it is important that everybody builds now while we have this tailwind. Joris, what do you think?