As banks and financial institutions explore distributed ledger technology (DLT), they are seeking platforms that offer security, cost-effectiveness and compliance, Hedera positions itself as a public network designed to meet these needs, enabling banks, payment providers and market operators to build applications with fixed transaction fees, fast settlement and a predictable governance structure. Isadora Arredondo, global policy director at Hedera, said the network was designed to balance open access with institutional safeguards. “Hedera is a public network where anyone can build, supported by permissioned validation that provides the assurances institutions expect,” she said. Permissioned validation means transactions are confirmed by known organisations rather than anonymous participants. By including well-known global firms on its governing council, Hedera ensures accountability and fosters institutional trust through identifiable operational responsibility. Traditional blockchains can frustrate institutions with variable fees, slow settlement times, and high energy consumption. Hedera’s architecture addresses these issues, integrating a technical layer with a governance model that clarifies operational responsibilities across jurisdictions. Arredondo said the design provides an environment where institutions can deploy applications with confidence, knowing roles and processes are clearly defined. Although industry adoption of DLT in financial services remains at an early stage—largely limited to pilots and early-stage experiments—Hedera presents its network as meeting the requirements banks seek for secure, scalable and compliance-aligned operations. Building performance, predictability and governance into Hedera Unlike traditional blockchains, Hedera uses a hashgraph system that records and processes transactions concurrently in a Directed Acyclic Graph (DAG). This structure supports rapid consensus without miners or reward-driven competition, resulting in faster transaction processing, lower energy use and more consistent system performance during periods of high network activity. “The architecture is extremely secure, highly scalable and reaches almost immediate finality, which is essential for financial institutions that cannot operate with settlement uncertainties,” Arredondo said. Transactions settle in about three seconds, and fixed transaction give institutions predictability in financial planning and risk control. Hedera’s network is governed by a rotating council of up to 39 global organisations, including Google, Dell and Deutsche Telekom. As of 2025, 32 members are active across technology, finance, aerospace and capital markets. Arredondo said the council “provides a layer of trustworthiness and predictability that institutions need to operate in a digital environment”. Council members act as named operators of the network’s main nodes, providing oversight comparable to traditional financial utilities than permissionless crypto networks. Decentralisation remains an important principle, she said, although institutions prioritise stability and robustness. Hedera’s structured decentralisation, with council-appointed node operators validating network activity on a rotating schedule, distributes decision-making while the transparency and predictability that institutions require. Engaging regulators across jurisdictions Regulatory frameworks for digital assets remain uneven, and Hedera has sought to participate in discussions in Singapore, Hong Kong, the United Kingdom (UK) and the European Union (EU) through pilots, consultations and industry alliances. Arredondo said these engagements provide insight into emerging supervisory expectations but do not imply regulatory endorsement of Hedera or any specific infrastructure. “It is the intermediaries operating on the network that are regulated, not the network itself,” she said, explaining that institutions map compliance requirements to their own regulated activities rather than to the protocol layer. She added that regulatory regimes differ widely in maturity and scope, so infrastructure providers must accommodate jurisdiction-specific rules while ensuring interoperability for regulated users. Hedera provides developer tools to support compliance processes such as asset controls, identity verification and transaction monitoring. Its software development kits help institutions meet obligations under know your customer (KYC), anti-money laundering (AML). Arredondo said these tools “support the level of oversight required for large-scale adoption of blockchain in financial services”, and meet the security and regulatory standards institutions evaluate when considering new infrastructure. UK’s cautious approach to digital assets The UK’s proposed stablecoin regime outlines how national authorities are assessing potential systemic risks in digital asset markets. The framework includes the Bank of England’s proposed 40% unremunerated reserve and temporary holding limits for retail and corporate users. “The UK is trying to regulate for systemic retail payments,” Arredondo said, noting that stablecoins are not yet used at a scale that would make retail payments systemically significant. She added that the limits could be challenging to implement because they assume an issuer–user relationship, which does not reflect how bearer assets move on public networks. Bearer assets function like physical cash or historical bearer bonds, where possession determines ownership. In digital settings, they behave like tokens in self-custody wallets, moving without account-based identity checks, which challenges supervisory models dependent on traceability. Arredondo also noted that the Bank of England aims to protect commercial banks’ lending capacity while supporting innovation, taking “a very open approach towards public blockchains” as it examines how DLT may affect financial stability. Networks prepare for long-term institutional use Arredondo said regulation should remain technology neutral, as rules tied to specific architectures risk becoming outdated. She called for increased regulatory literacy around modern deployment models, including permissioned public networks that allow open application development while reserving validation rights for recognised entities such as council members or licensed operators. As regulators transition from pilots to permanent frameworks, networks like Hedera position themselves as infrastructure partners aligned with compliance requirements. The adoption of tokenisation standards such as ERC-3643, which embed identity verification and transfer controls at the token level, alongside evolving stablecoin rules in the EU, UK and Hong Kong, shows a shift towards mechanisms that enhance auditability, identity controls and visibility of transaction flows. Hedera presents its fixed-cost model, structured governance and compliance-oriented architecture as foundations for institutional-grade digital finance. As financial infrastructure evolves, long-term suitability will depend on regulatory alignment, interoperability and consistent settlement outcomes across production environments.
