[Narrator] Hello everyone, welcome back to the TokenMinds Training series.

In this session, we’re going to explain how Hedera Token Service enables bank-grade stablecoins without smart-contract risk, and why this architectural shift matters for institutions operating in regulated environments.

[Narrator] First, we’ll look at built-in controls.

That means issuing stablecoins where enforcement is handled natively by the protocol itself, not by custom application code that needs to be written, audited, and constantly monitored.

Second is the architectural shift.

Instead of placing trust in smart contract logic, control moves down into the ledger infrastructure. This is the key difference that changes how risk committees, compliance teams, and regulators evaluate stablecoin systems.

[Narrator] Hedera is a public distributed ledger designed for enterprise and regulated use cases.

The Hedera Token Service provides native token functionality directly at the protocol level, meaning core token logic does not rely on custom smart contracts. This makes HTS suitable for payments, regulated assets, and enterprise settlement where deterministic behavior and safety are required.

[Narrator]  In most blockchain systems today, stablecoins are implemented through smart contracts. Those contracts define issuance, transfers, freezes, upgrades, and administrative controls. Over time, they are upgraded, integrated with other contracts, and extended as the system grows. As a result, the behavior of money becomes dependent on application code rather than the underlying ledger.

[Narrator]  Smart-contract stablecoins introduce failure modes that grow as complexity increases.

At initial deployment, logic risk is introduced immediately.

During upgrades, new and often untested execution paths are added. As integrations increase, unintended interactions get amplified.

This leads to familiar problems: code bugs, upgrade and proxy risks, reentrancy issues, and permission errors. Even well-audited code cannot eliminate these risks.

[Narrator]  Despite clear demand, many institutional stablecoin initiatives never move beyond pilots.

The reason is simple: risk committees and compliance teams resist architectures where core monetary behavior depends on mutable application code.

Mutable code dependency means core logic can change.

Ongoing audits mean continuous cost and operational overhead.

Regulatory uncertainty makes it difficult to explain failure modes in a way regulators accept.

This is not a technology problem—it’s a trust and governance problem.

[Narrator]  We move from programmable money, where smart contracts define behavior,

to infrastructure-enforced money, where the protocol validates all token operations.

The key shift is that token balances, supply, and permissions are enforced directly by the Hedera network.

Issuers configure token behavior instead of programming execution logic.

This removes user-written code from the core monetary trust boundary.

[Narrator]  Here’s how safety is enforced in practice.

Token rules are configured once at creation.

Balances and transfers are validated by the network itself.

State changes are finalized by Hedera consensus—not contract execution order.

There is no reentrancy risk, no upgradeable logic, and no custom transfer code.

These failure modes are structurally eliminated, not managed.

[Narrator]  Here are Key HTS Advantages:

Key HTS Advantages

First, consensus-level validation.

There are no execution-ordering exploits, no MEV interactions, and finality is deterministic.

Second, non-upgradeable behavior.

Token behavior is fixed at issuance. There are no proxy contracts, no logic drift, and no governance-driven surprises.

Third, predictable gas costs.

Operations are network-defined with bounded costs, enabling reliable fee forecasting—something institutions require for treasury and settlement planning.

[Narrator]  HTS is already live in real deployments.

AUDD in Australia is issued natively on HTS.

PHPX in the Philippines is a multi-bank peso stablecoin announced for Hedera.

There are also institutional pilots, including Shinhan Bank in Korea and SCB Tech X in Thailand.

The broader trend is clear: protocol-native token primitives are replacing smart-contract-based money for institutional use.

Stablecoin infrastructure is converging toward fewer moving parts and lower operational risk.

[Narrator] At TokenMinds, we believe bank-grade stablecoins require protocol-level enforcement, not smart-contract complexity.

HTS enforces token rules natively, which significantly reduces operational and compliance risk.

We help institutions design, pilot, and scale HTS-based stablecoin architectures aligned with real regulatory, treasury, and payment requirements.

Thank you for watching.

If you're ready to design and deploy institutional-grade stablecoins using Hedera Token Service, reach out to us. We’d love to help you build secure, compliant digital payment infrastructure.