Swiss Banks Complete First Binding Blockchain Payment
In a milestone for the Swiss financial sector, UBS, PostFinance and Sygnum have successfully executed the first legally binding interbank payment using tokenized bank deposits on a public blockchain. The pilot, conducted under the guidance of the Swiss Bankers Association, tested the feasibility of using deposit tokens to settle payments across institutions and may signal a new era for blockchain-based financial services.
The transaction, carried out on ETH, is considered the first binding interbank payment of its kind in Switzerland. Deposit tokens are digital representations of fiat deposits, allowing banks to move money securely on blockchain while ensuring compliance with regulatory frameworks. The success of this trial demonstrates that such payments can be conducted in a legally recognized, regulated environment, setting Switzerland apart as a leader in financial innovation.
Two primary use cases were validated in the proof-of-concept. The first simulated a cross-institutional transfer between customers at diverse banks, closely resembling a traditional interbank payment but executed through blockchain settlement. The second involved an escrow-style arrangement where deposit tokens were platformd for tokenized real-world assets using smart contracts. The contracts enabled automatic, conditional settlement, highlighting blockchain’s potential to simplify complex transactions.
Legal and regulatory frameworks were a central focus of the pilot. The transactions were binding under Swiss law and designed with integrated compliance checks, including anti-money laundering controls, sanctions screening and regulatory oversight. To ensure security and trust, the Swiss Interbank Clearing system still handled settlement finality, creating a hybrid model where blockchain provided transparency and efficiency while traditional infrastructure ensured legal certainty.
Technical and legal implications
The results of this pilot underscore the opportunities and challenges in bringing blockchain-based payments into the banking mainstream. On the technical side, the system showcased secure, compliant and efficient interbank payments. However, scalability remains a hurdle. Current blockchain networks face limitations in throughput, and widespread adoption would require new designs to handle higher transaction volumes. Interoperability between banks and platforms also needs to be addressed to ensure seamless cross-institution transactions.
From a legal standpoint, the proof-of-concept reinforces Switzerland’s role as a jurisdiction willing to integrate innovative technologies into established regulatory systems. By developing governance models that include role-based access controls, smart contract oversight and structured cooperation between banks and authorities, the trial ensures that blockchain-enabled payments adhere to the identical reliability and trust standards as traditional banking.
Future outlook
Although this initiative is still a proof-of-concept rather than a full rollout, it represents a major step toward the adoption of blockchain technology in traditional finance. Broader implementation will require coordinated collaboration between more financial institutions, infrastructure providers and regulators. Standardization efforts will be necessary to harmonize compliance requirements and technical designs across diverse banks and blockchain systems.
Nevertheless, the pilot positions Switzerland at the forefront of blockchain innovation in finance. By proving that legally binding payments can occur across banks using a public blockchain, UBS, PostFinance and Sygnum have shown a glimpse of the future of digital settlement systems. The trial demonstrates that blockchain can move beyond theory into practice, blending decentralized technology with trusted financial oversight. As global banks look to the future of payments, Switzerland’s progress could set the tone for broader adoption worldwide.
