UBS, PostFinance, and Sygnum successfully piloted interbank payments using deposit tokens on the Ethereum public chain, validating the technical and legal feasibility of blockchain-based settlements for financial institutions.

Executive Summary

Three major Swiss financial institutions—UBS, PostFinance, and Sygnum—have successfully executed the first legally binding interbank payments utilizing "deposit tokens" on the Ethereum public blockchain. This pilot project validates the technical and legal feasibility of using public blockchain technology for direct interbank settlements, signaling a potential shift in traditional financial infrastructure.

The Event in Detail

The feasibility study, coordinated by the Swiss Bankers Association (SBA), involved the use of deposit tokens, which are blockchain-based representations of payment instructions, not a new form of money. These tokens standardize a Swiss-law payment instruction, initiating an off-chain debit from one bank account and credit to another. On-chain smart contracts facilitated the coordination of these processes on the public Ethereum chain with permissioned access, while settlement finality occurred within the traditional Swiss Interbank Clearing (SIC) system. The pilot successfully demonstrated two primary use cases: a peer-to-peer payment between customers across different participating institutions and an escrow-like exchange of deposit tokens for tokenized assets with automatic execution. Integrated compliance checks for Anti-Money Laundering (AML), Combating the Financing of Terrorism (CTF), and sanctions were also confirmed as functional. While verifying the technical and legal aspects, the report noted current limitations including reliance on off-chain core banking systems and manual integrations.

Market Implications

This successful pilot suggests a significant step towards the integration of public blockchain technology into mainstream institutional finance. The validation of legally binding interbank settlements on a public chain like Ethereum enhances the network's utility for enterprise applications, potentially increasing its value proposition for institutional users. The move aligns with a broader industry trend where institutions are increasingly engaging with digital assets; a 2024 PwC report indicated over 70% of institutional investors plan to increase digital asset exposure, and digital assets under custody by institutional-grade custodians surpassed $300 billion in Q1 2025. UBS leadership stated this proof demonstrates that interoperability of bank money via public blockchains "can become a reality," accelerating innovation in tokenized assets and positioning Swiss banks at the forefront of financial system evolution. This development could pave the way for more efficient and secure transaction processes, potentially reducing operational risks and costs associated with traditional cross-border payments and collateral management.

Broader Context

Switzerland has been a leading jurisdiction in exploring tokenization, and this pilot complements ongoing initiatives such as Project Helvetia, which explores tokenized asset settlement using tokenized reserves. The Bank for International Settlements (BIS) has articulated a vision for a "unified ledger" where tokenized central bank reserves, commercial bank money, and other tokenized assets could form the basis of a next-generation monetary system, improving cross-border payments and securities markets. This pilot by UBS, PostFinance, and Sygnum directly contributes to this vision by proving the feasibility of tokenized commercial bank money on a public blockchain. Future scalability will require expanded participation from more banks, infrastructure providers, and regulatory bodies, along with exploring more "native" on-chain master records and potential linkages to wholesale Central Bank Digital Currencies (CBDCs) or automated Real-Time Gross Settlement (RTGS) triggers. The evolving global regulatory landscape, including frameworks like the EU’s MiCAR and advancements in the US and UK, also provides a clearer pathway for institutional adoption, further incentivizing such innovations.