UBS and Partners Show How Blockchain Could Replace Old Payment Rails

The trial, coordinated by the Swiss Bankers Association (SBA), brought together UBS, PostFinance, and Sygnum Bank. Instead of moving money directly through existing rails, the banks issued blockchain-based “deposit tokens” that represented customer funds. These tokens were then used to complete payments between institutions and to automate an escrow-style exchange for tokenized real-world assets.

Why It Matters

For regulators and banks alike, the experiment demonstrated that blockchain infrastructure can handle more than pilot projects — it can execute transactions with full legal standing. Smart contracts managed compliance, security, and verification, while the use of a public chain showed how traditional deposits can interact with decentralized networks without compromising oversight.

Christoph Puhr, digital assets lead at UBS, said the PoC proved that bank deposits and public blockchains can work together. He argued this creates “a pathway to innovation around tokenized assets” and could reshape financial systems both in Switzerland and abroad.

Challenges Still Ahead

Despite the milestone, the SBA noted that large-scale adoption is not yet practical. Scaling the system will require technical adjustments, closer cooperation with other institutions, and alignment with regulators. Without that groundwork, deposit tokens will remain an experiment rather than a widely used settlement tool.

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The Swiss results echo research from other markets. Earlier this year, the New York Federal Reserve and the BIS Innovation Hub Swiss Centre published findings on how smart contracts could help central banks respond faster in a tokenized environment. While promising, both groups acknowledged that existing financial infrastructure is still far from ready for complex blockchain applications.

A Step Toward Convergence

For Switzerland, the proof-of-concept reflects how its banks are positioning themselves at the intersection of traditional finance and decentralized infrastructure. If future trials succeed, blockchain-based payments could eventually sit alongside conventional systems, offering banks new ways to manage money and assets in real time.

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