Evaluating Blockchain Infrastructure for Institutional Finance: A Comparative Assessment of Scalability, Regulatory Compliance, and Financial Market Adoption
Purpose: This research assesses the key blockchain infrastructures utilized in decentralized finance, tokenized asset markets, institutional settlement systems, and the development of new digital financial ecosystems. The paper focuses on both Layer 1 and Layer 2 networks, emphasizing scalability, institutional uptake, privacy frameworks, transaction traceability, and alignment with regulations. Design/Methodology/Approach: The study adopts a qualitative comparative research design. Ethereum, Solana, Avalanche, Arbitrum, Optimism, Base, Monero, and Zcash are evaluated using data from peer-reviewed literature, official blockchain documentation, institutional announcements, regulatory publications, industry research reports, and publicly available market data. The analysis uses five criteria: scalability and transaction efficiency; institutional adoption and ecosystem development; regulatory compatibility and AML compliance; privacy and traceability; and suitability for tokenized asset and financial market infrastructure. Findings: The assessment indicates that Ethereum remains the leading platform for decentralized finance and tokenized asset infrastructure. Solana has shown significant institutional growth through stablecoin settlements, tokenizing real-world assets, and enterprise collaborations. Avalanche occupies a distinct position through its configurable subnet architecture. Layer 2 ecosystems such as Arbitrum, Optimism, and Base enhance Ethereum’s scalability while maintaining settlement security through Ethereum Layer 1. Privacy-oriented chains face substantial institutional barriers because of transaction-traceability and AML requirements. Practical Implications: The findings suggest that financial institutions seeking blockchain infrastructure should evaluate technological performance together with governance, regulatory compatibility, auditability, identity controls, and traceability transaction. Hybrid architecture combining public settlement with compliance and governance frameworks offers a practical pathway for institutional adoption. Originality/Value: The study provides a comparative regulatory and operational assessment of Layer 1, Layer 2, and privacy-oriented blockchain architectures for institutional financial services, addressing a gap identified in the existing literature.