UBS, PostFinance, and Sygnum Bank executed what they call the first legally binding interbank blockchain payment on a public blockchain, under the Swiss Bankers Association (SBA). The feasibility study used a deposit token to trigger an offchain fiat transfer while preserving compliance controls. The SBA said the proof-of-concept confirms feasibility for institutional payments and highlights next steps on scalability and interoperability.
Deposit Token Payments on a Public Blockchain
The participants tested deposit token instructions on a public blockchain to initiate an offchain fiat transfer between bank customers. The blockchain payment created a traceable record, while bank deposits moved inside existing systems. This kept settlement within regulated balance sheets and standard audit trails.
They also ran an escrow-style exchange between deposit tokens and tokenized RWAs. Here, smart contracts released assets only after the deposit token was in place. The setup reduced manual coordination and kept controls with the banks.
The SBA said permissioned applications on a public blockchain can trigger “legally binding” transfers between institutions. The design emphasized verifiable processes and technical safeguards. It aligned on-chain messages with compliance requirements for institutional payments.
Smart Contracts, Compliance, and Tokenized RWAs
The study used smart contracts to enforce steps for payment sequencing and conditional settlement. Code handled releases and produced proofs for each event. Therefore, reconciliation across ledgers remained straightforward.
In the tokenized RWAs scenario, an escrow contract connected asset delivery to bank deposits via the deposit token. This showed how asset flows and blockchain payment instructions can work together. Banks maintained compliance oversight while the contract executed agreed terms.
The approach supported auditability and record integrity. Each transaction produced a timestamped on-chain log. Meanwhile, offchain fiat settlement matched the instruction and preserved bank deposits within regulated systems.
Scalability and Interoperability for Bank Deposits
The SBA said scalability needs design adjustments and broader cooperation with banks, providers, and authorities. Performance and resilience targets must match institutional standards. Interoperability across systems remains a key requirement.
Christoph Puhr, digital assets lead at UBS Group, said the proof-of-concept shows that interoperability “can become a reality,” adding: “The PoC demonstrates that interoperability of bank money via public blockchains can become a reality, enabling innovation around tokenized assets.” He said this enables institutions to shape future tokenized assets infrastructure.
Founded in 1912 in Basel, the Swiss Bankers Association represents about 265 organizations and more than 12,000 individuals. It coordinated the feasibility work with UBS, PostFinance, and Sygnum Bank. The association presented blockchain payment results and noted the remaining scalability work.
Central Bank Research: Project Pine Findings
Meanwhile, in the United States, the Federal Reserve Bank of New York’s Innovation Center and the BIS Innovation Hub Swiss Centre explored smart contracts in Project Pine. Specifically, the research examined tools for a tokenized financial setting and, in turn, focused on how programmable logic can support policy operations.
“The smart contract toolkit was fast and flexible,”
the BIS wrote.
“In hypothetical scenarios, the central bank was able to add and change tools instantly.”
The study assessed operational agility for tokenized assets and institutional payments.
The BIS also pointed to infrastructure limits. Most platforms would need upgrades for advanced, real-time tools. That aligns with the SBA note on scalability and interoperability for bank deposits and blockchain payments on a public blockchain.