The Swiss banking giant UBS, crypto bank Sygnum, and PostFinance, a subsidiary of the state-owned Swiss Post, have successfully conducted payment tests between institutions on Ethereum, as announced in a press release this Tuesday.
This proof of concept, executed under the Swiss Bankers Association, involved UBS, PostFinance, and Sygnum Bank executing transactions with deposit tokens—digital forms of bank deposits that function on a public blockchain.
The payments were legally settled between banks without the use of the traditional payment system. Transactions occurred on Ethereum under a permissioned framework.
While Switzerland boasts an efficient domestic payments network, traditional systems lack the capability for programmable conditions or easy integration with blockchain markets, according to the companies. With deposit tokens, future transfers could be processed instantly and linked to automated conditions through smart contracts.
For instance, a securities trade might settle immediately upon ownership transfer, or an insurance payout could be triggered following claim validation.
The trial explored two applications: peer-to-peer payments between customers of different banks and an escrow-like model where deposit tokens were exchanged for tokenized assets.
Although the project confirmed both technical and legal viability, scaling the system will necessitate broader involvement from banks, infrastructure providers, and regulators. The Swiss Bankers Association mentioned that this initiative aligns with its strategic focus on digital currencies, but the pilot does not imply that deposit tokens will be rolled out immediately.
