UBS, PostFinance and Sygnum have completed what is being described as a first for Switzerland’s banking industry: a legally binding interbank payment using tokenized bank deposits on a public blockchain. The pilot, supervised by the Swiss Bankers Association, explored how deposit tokens could support settlement between different institutions. By transferring funds over Ethereum under the stipulated regulatory conditions, the experiment demonstrated that payment using blockchain can be made under Swiss law in a regulated and secure context, an achievement that serves to highlight the nation’s resolve to pioneer financial innovation. Deposit tokens, essentially the digital equivalent of fiat deposits, facilitate banks to move value securely while maintaining compliance as the focus.
The pilot tested two primary use cases. One mirrored a standard interbank transfer, but instead of relying solely on existing payment rails, the transaction was processed on blockchain. The second was more complex, setting up an escrow-style arrangement in which deposit tokens were exchanged for tokenized real-world assets through smart contracts. Here, settlement terms were coded into the system itself, so the transaction automatically settled when conditions were satisfied. To maintain trust and finality, however, the Swiss Interbank Clearing system remained engaged in devising a hybrid solution in which blockchain brought efficiency and transparency, and traditional infrastructure delivered legal certainty upon which banks depend. Regulatory issues such as anti-money laundering controls, sanctions checks and regulatory oversight were incorporated into the process.
The trial showed that interbank payment using blockchain can be done in a secure, compliant, and efficient way, while also pointing out existing limitations like capacity of the network and the necessity for smoother institutional coordination. Scalability remains the big challenge, with present blockchain networks not being able to clear high volumes at the same pace as traditional systems. Interoperability across platforms and banks is another hurdle if such technology is to be deployed more widely. Legally, however, the experiment reinforced Switzerland’s willingness to integrate advanced technologies into its established frameworks.
Although still a proof-of-concept, the initiative positions UBS, PostFinance and Sygnum at the forefront of digital settlement development. By proving that binding payments can be completed between banks on a public blockchain, the trial points toward a future where decentralized infrastructure and regulated financial systems work hand in hand.