When it comes to the application of blockchain in the financial sector, privacy protection and compliance auditing often seem like two mutually exclusive tracks—completely anonymous solutions cannot pass regulatory scrutiny, while fully transparent public chains expose transaction details. However, a project called Hedger Privacy Engine has found a loophole: using granular data disclosure methods to allow financial institutions to hide sensitive information like transaction amounts while providing compliance certificates to regulators.

Early testing results were indeed impressive. In securities trading scenarios, this engine could process up to 15 transactions per second, with a compliance audit success rate of 100%—a performance that gained recognition among small and medium financial institutions in Europe, indicating the technical approach is sound.

But then, problems emerged. Stress testing in Q3 2025 revealed some concerns. When the system handled more than 50 complex financial transactions simultaneously, data validation started to hiccup, with three instances of delay, the longest being up to 8 seconds. For financial transactions, this is a critical flaw—users require confirmation within seconds, and an 8-second delay is unacceptable.

Two other issues are also significant. The new hardware has poor compatibility, consuming 23% more resources than industry average when deployed in mainstream server clusters, which directly translates to higher operational costs. Currently, the engine can only handle securities and stablecoins scenarios; more complex financial activities like derivatives and cross-border payments are still in testing, limiting the scope for scenario expansion.