Hedera has spent the past week promoting its submission to the FCA and Bank of England Call for Input on tokenisation in UK wholesale markets. On September 14, the network posted on X that regulatory clarity is not enough and that trust sits at the infrastructure layer. The document it linked to tells a more complicated story for Hedera.
The Financial Conduct Authority and the Bank of England published Feedback Statement FS26/1 that day. It summarizes responses to their May Call for Input on tokenising UK wholesale markets. Hedera appears once, as a name in the list of respondents, and the regulators attribute no position to it.
123 Responses Put Collateral Ahead of 24/7 Trading
The regulators received 123 responses. Respondents ranged from BlackRock, HSBC, and Euroclear to blockchain networks including Ripple, Chainlink, the Stellar Development Foundation, and Digital Asset Holdings (Canton). Collateral was by far the most cited use case. Respondents rarely mentioned 24/7 trading and atomic settlement, except where those features helped collateral move faster.
Firms also asked for speed. They said a lack of permanence in the regime was discouraging investment, and they wanted a long-term settlement model to follow the Digital Securities Sandbox (DSS). The regulators confirmed that a joint UK tokenisation roadmap with dates for each workstream will be published later this year. They also noted that HSBC has already received DSS permissions for notary, top-tier account maintenance, and settlement functions.
Hedera Argued for Public Permissioned Networks
Hedera’s submission made the case for public permissioned networks in securities markets, according to a policy update by Chief Policy Officer Nilmini Rubin and VP of Global Policy Isadora Arredondo. They identified weak interoperability and fragmented liquidity as the real barriers to adoption.
Most respondents agreed on interoperability. Many wanted it treated as a standalone workstream in the roadmap, covering legal, regulatory, and cross-jurisdictional alignment as well as technical links between chains.
FS26/1 Leaves Technical Standards to Industry
The regulators’ answer limits how far that argument goes. FS26/1 says industry is better placed to determine technical blockchain standards, product and transaction identifiers, and operating norms that support interoperability. It treats interoperability as a theme of the Wholesale Digital Markets Champion’s report and a focus of industry Action Group 2 on secondary markets, including work to test cross-border trading. The authorities say they will align with that work rather than run it themselves.
They also held firm on accountability. Dealing, arranging, and safeguarding must remain with regulated firms, and regulators see no case for changing the perimeter. FS26/1 compares DeFi software providers to cloud computing vendors: they can support financial services, but regulated firms remain responsible for outcomes such as operational resilience and KYC.
Bridges and Cross-Chain Messaging Named as Resilience Risks
On page 9, the regulators say that for traditional investment products such as government bonds and equities they cannot accept solutions that leave customers without recourse when assets are lost or stolen. They add that recent incidents have exposed operational resilience risks in decentralised infrastructure, including vulnerabilities in bridges, key-management systems, governance arrangements, oracle providers and cross-chain messaging layers. They also flag wallet security and self-custody risk, citing the Coldcard incident as sitting outside the protocol stack.
That puts Hedera’s cross-chain product in view. Hashgraph, the enterprise software firm developing it, introduced CLPR at HederaCon in May as a bridgeless protocol. CLPR verifies the state of other ledgers using cryptographic proofs rather than relying on pooled assets or bridge validators. The Hedera Governing Council has approved adoption of CLPR for the Hedera network, according to Hashgraph’s LFDT lab proposal. HIP-1535 remains a draft pending Hiero TSC approval.
CLPR Remains in Closed Beta
CLPR is not yet running at the scale FS26/1 describes. Hashgraph’s own documentation says the protocol is in closed beta. Its first deployment connects only HashSphere private networks to the Hedera public network, and support for Ethereum and other public chains is planned but not live.
Hashgraph also names CLPR’s most consequential risk: a bug in a verifier contract or a flawed state-proof implementation. The firm says verifier contracts should be treated as security-critical code and independently audited before deployment. That places CLPR in the same cross-chain messaging category that FS26/1 lists among recent failure points.
Next Milestones for Hedera in the UK
The roadmap is due by the end of 2026. The Bank of England will consult on central counterparties accepting tokenised collateral later this year, and the FCA plans to consult in the first half of 2027 on safeguarding rules for relevant specified investment cryptoassets (RSICs). Both regulators have said they will not select networks, which leaves adoption decisions to the regulated firms building on them.
Author: Ayanfe Fakunle
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
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