Swiss Banks Complete First Legal Transaction With Blockchain
Some of Switzerland’s biggest banks have completed a proof-of-concept showing that blockchain and smart contracts can be used for interbank payments. The Swiss Bankers Association (SBA) announced that UBS, PostFinance, and Sygnum Bank carried out the test, which they described as the first legally binding payment between banks made on a public blockchain.
The system relied on deposit tokens, where fiat money transfers were initiated offchain but triggered by tokenized payment instructions recorded on blockchain. One use case tested payments between bank customers, while another trial handled an escrow-style exchange of deposit tokens for tokenized real-world assets with automated settlement.
Blockchain payments face challenges but show promise
The SBA highlighted that the smart contracts behind the project offered security, transparency, and compliance with regulations. They also noted that legally binding payments could be carried out using public blockchains when combined with permissioned applications.
However, the group acknowledged that scaling the system will require further technical refinement and stronger collaboration with banks, regulators, and infrastructure providers.
The success of this pilot could encourage other major financial institutions to look at blockchain-based payment systems, which may accelerate the merging of traditional finance with decentralized finance (DeFi).
Interoperability between banks and public blockchains
UBS digital assets lead Christoph Puhr said the test proves interoperability between traditional bank money and public blockchains is moving closer to reality. He added that this could spark more innovation in tokenized assets and help shape the future of financial systems both in Switzerland and worldwide.
Central banks in other countries are also exploring blockchain. A joint study by the US Federal Reserve Bank of New York’s Innovation Center and the Bank for International Settlements (BIS) Swiss Centre found that smart contracts could give central banks powerful and flexible tools in a tokenized financial system.
While the technology showed strong potential, the BIS also pointed out that most central banks’ existing systems are not yet prepared to handle advanced use cases.
Sources:
https://cointelegraph.com/news/swiss-banking-giants-blockchain-study-bank-deposits