Swiss Banks Prove Blockchain Can Legally Bind Interbank Payments

A proof-of-concept (PoC) conducted by some of Switzerland’s largest banks, including UBS, PostFinance, and Sygnum Bank, has demonstrated the feasibility of using public blockchains for legally binding interbank payments. The study, conducted under the umbrella of the Swiss Bankers Association (SBA), explored blockchain-based deposit tokens and payment infrastructure. It successfully executed the first use case involving a payment between customers of the participating banks and another simulating an escrow-like process with tokenized real-world assets (RWAs) . The test marks the first time banks have carried out legally binding payments across institutions using public blockchain technology.

The PoC involved triggering an off-chain fiat money transfer by tokenizing payment instructions on the blockchain as "deposit tokens." The system's underlying smart contracts ensured verifiable processes, technical security, and compliance with regulatory requirements, according to the SBA. The participating banks emphasized that public blockchains with permissioned applications can support such legally binding transactions. While the results confirm the "feasibility" of institutional payments using blockchain technology, scalability challenges remain. Additional design adjustments and increased cooperation with other banks, infrastructure providers, and authorities are required to scale the solution.

Christoph Puhr, digital assets lead at UBS Group, stated that the study signals that interoperability between traditional bank deposits and public blockchains is becoming a "reality." The PoC, he added, "demonstrates that interoperability of bank money via public blockchains can become a reality, enabling innovation around tokenized assets." Puhr highlighted that this development accelerates innovation in tokenized assets and positions Swiss banks to actively shape the future of financial systems—both nationally and globally .

The successful study may signal increased interest in blockchain-based payment rails from large financial institutions, potentially accelerating the convergence of traditional and decentralized finance (DeFi). In parallel, central banks are also exploring blockchain infrastructure. A joint study by the U.S. Federal Reserve Bank of New York and the Bank for International Settlements (BIS) Innovation Hub Swiss Centre found that smart contracts could offer central banks flexible and rapid-response tools in a tokenized financial system. The BIS report acknowledged infrastructure challenges, noting that most existing systems lack advanced use cases for smart contracts .

Switzerland has emerged as a global leader in the integration of blockchain technology into traditional financial systems. The DLT Act, introduced in 2021, provides a legal framework for blockchain applications, ensuring legal certainty and promoting innovation. Swiss banks, including Sygnum, Swissquote, and Maerki Baumann, have pioneered regulated digital asset services, leveraging the country's robust regulatory environment and strong reputation for security and trust . The Swiss banking sector's focus on digital asset integration is driven by the growing demand for innovative financial solutions, including tokenized RWAs, custody services, and staking.

The potential market for tokenized RWAs is projected to exceed USD 16 trillion by 2030, presenting a significant opportunity for Swiss banks to lead in this domain. UBS, for instance, has issued tokenized bonds through the Swiss Digital Exchange, demonstrating early adoption of this transformative innovation . The DeFi market is also anticipated to grow substantially, reaching USD 231.19 billion by 2030, with Swiss banks well positioned to benefit from this expansion by offering institutional-grade DeFi services .

Despite these opportunities, challenges remain. Technological readiness, regulatory compliance, and consumer education are critical hurdles to broader adoption of digital asset services. Swiss banks are addressing these challenges through partnerships with fintech firms and blockchain specialists, as well as by investing in blockchain education and research. The Swiss financial ecosystem's integration of digital asset services reinforces its position as a dominant force in the global blockchain landscape .

In conclusion, the Swiss banking sector's proactive approach to blockchain integration underscores its commitment to innovation and leadership in the digital asset ecosystem. The PoC study conducted by UBS, PostFinance, and Sygnum Bank highlights the potential for public blockchains to support legally binding bank payments, marking a significant step forward in the convergence of traditional and decentralized finance.