Making the for in Finance

On October 20, 2025, a simple mistake in Amazon Web Services (AWS) caused a big problem. A DNS error led to a 15-hour outage. It hit 113 cloud services and over 1,000 companies. Most businesses just faced delays. But for finance operations, it was worse.

The Base blockchain, a Layer 2 network on Ethereum, handles billions in trades. During the outage, its block times jumped from 14 minutes to 78 minutes. Speed dropped by 40%. Users could not finish transactions.

At the same time, true distributed blockchain networks kept working fine. No slowdowns. No issues. This was not luck. It was their design.

Why Tech Choice Matters for Banks and Regulators

Big institutions use blockchain for regulated assets like tokenized bonds or stablecoins. They pick tech based on who they know and trust. That makes sense at first. But regulators care about risks in the tech itself.

Regulators will ask tough questions:

• How did you check the tech risks?
• What are the weak points? Did you test them?
• Is there too much power in one place?

Finance rules push to avoid concentration risk. This means not putting all eggs in one basket. The same applies to blockchain.

The Hidden Risks in Popular Layer 2 Networks

Layer 2 networks like Base, Optimism, and Arbitrum settle on Ethereum. They seem open. But many use a single sequencer. This is one company that orders transactions and makes blocks.

For Base, Coinbase runs the sequencer on AWS. When AWS failed, Base failed too. This is pure concentration risk: one operator, one cloud provider, one failure point.

Experts note this shows the big risk in Layer 2s with central control.

Private blockchains have their own issues. A group or one company controls them. They can change rules or block access. Regulators see only what controllers show.

: Control Assets, Not the Chain

The fix? with distributed validators. Many independent groups run nodes on different clouds and locations. No one controls it all.

Open does not mean chaos. It means no single boss. Issuers keep full control over assets:

• Decide who holds them.
• Freeze for compliance.
• Claw back for fraud.

Network is open and tough. Assets have the rules needed. This fits legal needs perfectly.

Real-World Wins: Big Players Choose Open

Leaders like BlackRock, Franklin Templeton, Fidelity, and U.S. Bank use open networks for tokenization. Billions settle daily. SEC approved funds on public chains. Banks test stablecoins there.

Why? Every trade is public and checkable. Regulators verify directly. No need to beg a private operator for data.

Private chains gatekeep. Who gets in? On what terms? What if the operator competes with you? Open networks avoid this.

Lessons from the AWS Outage

During the outage:

Finance needs 99.99% uptime. Distributed design delivers it.

Regulators Are Shifting to Fair Rules

New U.S. rules protect open blockchains. They want tech-neutral approaches. Basel rules on crypto are questioned. They hit open chains hard but ignore good designs with known validators.

Future rules focus on results: Does it cut risks? Open networks do.

Five Key Questions for Your Blockchain Choice

1. Who controls the sequencer or validators?
2. What happens in a cloud outage?
3. Can regulators check all data freely?
4. Are you dependent on a rival?
5. Does it match your risk framework?

Answers point to open networks.

The Bottom Line: Act Now or Face Risks

The for is clear. They offer resilience, compliance, and neutrality. Centralized options bring old risks back.

Next outage is coming. What will you tell your board? Regulators? Switch to open for safety.

Explore distributed validators today. They build trust through tech, not just names.

This is not just tech talk. It’s a smart legal and business move.

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Disclaimer: Blockmanity is a news portal and does not provide any financial advice. Blockmanity's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Blockmanity won't be responsible for any loss of funds.