Decentralised finance (DeFi) is maturing, and regulated financial institutions are ready to participate. With new innovations developing, traditional finance (TradFi) is recognising blockchain’s potential to introduce new efficiencies and revenue sources that existing financial market infrastructure cannot provide.
R3 has spent the last decade helping financial institutions safely and securely adopt distributed ledger technology. In doing so, we’ve enabled new efficiencies, enhanced trust, and created pathways to meaningful cost savings across global markets, all while ensuring firms can operate with the privacy, control, and compliance that traditional markets demand.
But that was then. Financial markets and the needs of financial institutions are evolving, and so too must the infrastructure that supports them. Having proven blockchain’s capabilities through both pilots and live deployments on permissioned networks, institutions are now turning to public networks—the same infrastructure used by DeFi participants—to access greater liquidity, ecosystem-wide connectivity, and utility-driven protocols.
However, despite institutional finance’s drive towards public chains, one sticking point frequently emerges: privacy. A core value proposition of DeFi and public networks is their transparency. This transparency is precisely what has fuelled the success of public blockchains in establishing trust within the DeFi ecosystem. But as the technology gains traction, the question remains: does this same openness present challenges for adoption in regulated financial markets?
These privacy concerns are not misplaced: there can be risks when interacting with public chains. However, it is also true that not all chains are alike. There is a reason why R3 selected Solana as its public chain of choice earlier this year: we judged it was one of the few chains that could meet the needs of regulated finance using ‘out of the box’ tools. And, in so doing, R3 + Solana represents something truly unique: the full benefits of a true public ecosystem without compromising on the non-negotiable requirements of finance.
Why does this matter? It matters because if you can achieve your privacy goals on a true public chain, then the case for pseudo-public compromise-chains evaporates completely, and financial institutions no longer face the terrible trade-off between compliance and liquidity, innovation and future-proofing.
In this piece, we outline the key privacy requirements a chain must address if a regulated firm is to use it, and how R3 + Solana can deliver just that.
Delivering institution-level privacy on Solana
Privacy frequently comes up as the primary cause of scepticism in public chains:
- How can institutions trust who is validating their transactions?
- Is there a risk that capital will flow to unvetted entities?
- Will transaction data revealing trading strategies or other proprietary information be exposed?
- How can we prevent frontrunning or sandwich attacks?
Historically, these concerns kept TradFi away from public blockchains. But permissionless infrastructure has matured, particularly through the architectural innovations introduced on Solana. Now, institutions can tap into large user bases and liquidity pools without compromising security and control.
Validator transparency and control
Traditionally, public blockchains have relied on networks of anonymous validators. Anyone with an internet connection and the right hardware could participate in the network and earn mining and staking rewards in exchange for supporting the network’s operation. These distributed validators are a core feature of the DeFi model, enabling the network to essentially police itself while being resistant to state censorship and maximising innovation.
But transaction confirmation needs to be paid for, and fees for any given transaction flow to the validator that validates it. So, if the validator is anonymous, isn’t there a risk that a regulated institution could be paying money to a sanctioned entity in a hostile country?
If they are to engage with DeFi, institutions will want to face known and trusted intermediaries with compliance and KYC procedures, ensuring that those they transact with are legal and safe.
Solana’s validator architecture supports this model, with more than 1,000 validators securing the network globally. Solana validators each have a unique identifier, and Solana’s consensus model provides visibility of which validators are scheduled. Network users can use this knowledge to construct and submit transactions that can only be processed by validators they choose.
While the network includes a mix of validator types, many of which are anonymous and permissionless, it also hosts known and regulated entities who are fully public and are trusted by institutions. This means users can select validators they know and trust, thereby guaranteeing that transaction confirmation is carried out by parties that meet their compliance and regulatory standards.
Surely, then, if trusted validators are more sought out by financial institutions, they will be in higher demand, leading to more expensive transaction fees, right?
The beauty of public networks is its ecosystem of users, ranging from DeFi to institutions. Just as regulated users may compete for ‘block space’ provided by identifiable and compliant validators, many DeFi users that prize the network’s permissionless nature will favour anonymous validators. In public chains, different validators speak to different users. For this reason, trusted validators may have to compete with one another to attract institutions, discouraging bad actors from raising gas fees exorbitantly or taking advantage of institutional trust.
Data confidentiality on a public chain
Another question that arises is data confidentiality. Due to public networks’ transparency, transactions are visible not only to validators but, in principle, anyone. How can institutions ensure that sensitive data which could indicate a firm’s trading strategy or financial standing remain private?
Relying only on a network of trusted validators solves one part of this equation. Financial institutions already have a network of trusted counterparties they transact with – public chains like Solana leverage the same model and even offer enhanced privacy controls.
For example, Solana provides out-of-the-box transaction and balance confidentiality as part of its widely-adopted standard “Token-22” implementation. These functionalities – known as Token Extensions – allows institutions to natively protect transaction details like asset type, transaction values, wallet addresses, and other sensitive fields from the public record. Token-2022 also provides transfer hooks that support whitelist enforcement, ensuring that assets can only be transferred to known and pre-approved parties, and freeze support for assets and accounts so issuers can control where and how their assets are used.
Solana’s confidentiality features are not theoretical or experimental; they are live, tested, and designed for real-world institutional deployment. Its privacy provisions are institution-grade, meaning firms no longer need to decide between efficiency and control. With Solana, they can access both.
Addressing MEV and execution integrity
One of the more specific concerns is the risk of Maximum Extractable Value (MEV), particularly in contexts involving trading or market activity. With MEV, validators optimise the ordering of transactions within a block to extract value for themselves at the expense of other participants. This issue is prevalent across most blockchains, and it is a very real reason for regulated institutions to have reservations about this space.
The risk for them, however, is low. Many institutions use limit orders and defined execution conditions, which inherently reduce MEV risk. More importantly, as discussed above, Solana allows institutions to use trusted, known validators who will refrain from MEV practices.
Second, Solana’s Application Controlled Execution means that transactions can be selectively routed and encrypted. By submitting orders only to trusted validators (or by using confidential execution to hide the details entirely), institutions can ensure that MEV-sensitive transactions are protected before, during, and after validation.
This offers a level of execution integrity that is entirely compatible with institutional standards, without sacrificing the advantages of issuing assets on public chains.
R3’s collaboration with Solana allows for institutional-grade privacy
Our collaboration with Solana is the next step in the development of financial market infrastructure. By leveraging the R3 aggregator, institutional clients can access the Solana notary, enabling token exchange with delivery versus payment (DvP), asset bridging, and transaction settlement directly on the public blockchain against Solana-native assets, like stablecoins.
Solana uses a multi-layered approach to data storage that balances performance, decentralisation, and scalability. Data is stored in an Account-Based Storage. This way, all on-chain data is stored in accounts. Combined with R3’s unique privacy model, no sensitive data needs to be stored on the public chain, even when bridging or settling transactions directly against Solana-native assets.
Through the R3 Aggregator, transactions on permissioned networks can be confirmed directly on Solana. The Solana leg can then be executed using Solana-native privacy tools. This hybrid model enables full confidentiality for sensitive workflows while unlocking the liquidity, finality, and reach of a public network.
Our collaboration is tailor-made for institutions to leverage the benefits of public chains with ease and control.
Institutions are already participating, and the activity speaks for itself
While privacy remains a key consideration, institutional adoption patterns increasingly reflect a broader reality: liquidity, usability, and reach are just as important, if not more.
Today, the vast majority of stablecoin activity takes place on public chains like Solana—the market leader with over 40 unique stablecoins representing more than $10b issued. In 2025, Solana is on track to power $10 trillion in transfer volume. When it comes to speed and scalability, Solana is in a league of its own—processing transactions nearly 76x faster than Ethereum in July alone. During this period, Solana handled roughly 3.5 billion transactions, compared to Ethereum’s 46 million. These flows are visible, regulated, and growing. Meanwhile, private or semi-private networks with stricter data visibility rules tend to attract significantly lower transaction volumes.
This isn’t a rejection of privacy. Rather, it reflects a preference for platforms that offer both control and connectivity. Solana’s architecture meets that bar.
The future is public, but permissioned
Solana’s validator transparency, configurable privacy, and execution safeguards are market-leading. Solana has shown the capacity to handle roughly 10% of NASDAQ’s daily volume ($28B) with 1-second finality and $0.001 median fees. Now, institutions can directly access the Solana network with the R3 Aggregator to bridge institutional platforms to public chain infrastructure.
We are creating a new paradigm.
Institutions no longer have to choose between private control and public reach. They can now operate confidently on public networks with the same standards of compliance and privacy they are used to, while accessing the liquidity and performance that private environments alone cannot deliver.
The future isn’t a choice between private and public chains.
The future is public, and permissioned. With R3 and Solana, that future is closer than ever.
