In a significant stride towards modernizing financial infrastructure, three prominent Swiss banks – UBS, PostFinance, and Sygnum Bank – have successfully executed an interbank payment utilizing tokenized deposits on a public blockchain. This groundbreaking feasibility study, overseen by the Swiss Bankers Association (SBA), marks a pivotal moment in the integration of distributed ledger technology within traditional banking systems.
The initiative demonstrated that deposit tokens, which are digital representations of bank deposits on a blockchain, can facilitate secure and efficient transactions between financial institutions. Thomas Frei, Sygnum Bank's Director of Product Innovation, described the project as "truly something new," explaining how tokenizing deposits allows them to be actively used on the blockchain for swift transaction settlements. This advancement addresses current limitations in payment infrastructure, aiming to enable programmable payments via smart contracts and facilitate round-the-clock transactions.
This pioneering effort showcased not only the technical feasibility but also the legal viability of such transactions. The system employed smart contracts to ensure transactions were secure, compliant, and automatically executed, adhering to Swiss banking regulations. Legally, the token functions as a standardized payment instruction under Swiss law, triggering off-chain fiat transfers while ensuring settlement finality through existing clearing systems like SIC.
Crucially, the trial integrated compliance checks for Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF), and sanctions. Christoph Puhr, digital assets lead at UBS Group, highlighted the broader implications, stating, "The PoC demonstrates that interoperability of bank money via public blockchains can become a reality." This capability allows tokenized deposits to be used across different financial institutions, offering enhanced flexibility and efficiency compared to earlier tokenization efforts, such as JPMorgan's, where tokens were restricted for use within the bank itself.
The successful test signals a growing interoperability between traditional bank deposits and public blockchains, potentially accelerating the convergence of traditional finance and decentralized finance (DeFi). Looking ahead, the study indicates that future payment processes could be processed immediately and definitively on shared infrastructure, with direct integration into automated business workflows. This paves the way for a new era of faster, more secure, and efficient payments.
Switzerland, often recognized as "Crypto Valley," continues to solidify its position as a leader in financial innovation, exploring advanced technological solutions to enhance banking transaction efficiency and security. While challenges related to scalability and the need for broader cooperation with other banks, infrastructure providers, and authorities remain, this successful pilot represents a significant step in shaping the future of global financial systems and integrating blockchain technology more deeply into the financial landscape.