Swiss banks have reached a milestone by completing the world’s first legally binding interbank payment using public blockchain technology. The development, announced by the Swiss Bankers Association (SBA), demonstrates how tokenized deposits and smart contracts can integrate with traditional banking while staying legally enforceable.
On September 16, 2025, UBS, Sygnum Bank, and PostFinance completed a joint feasibility study under the SBA’s supervision. The project tested how blockchain-based deposit tokens could function in real-world interbank transactions.
The pilot marked the first time banks executed an enforceable financial payment on a public blockchain using their own deposits. Unlike private networks used by other global banks, this study relied on Ethereum for settlement instructions, giving it transparency and auditability.
The study used tokens representing Swiss franc bank deposits. These tokens were not like retail stablecoins but instead backed one-to-one by bank reserves. By placing instructions on Ethereum through smart contracts, the tokens reflected claims on fiat held in off-chain bank accounts. The proof-of-concept not only showed operational success but also confirmed the system’s compliance with Swiss law, ensuring transactions were enforceable and secure.
The process involved tokenizing deposits, embedding instructions, and executing conditions using smart contracts. For example, a simulated UBS client could initiate a payment to a Sygnum customer. The transfer request minted a deposit token on Ethereum.
Smart contracts managed the logic, including compliance checks and safeguards. Some tokens were designed like escrow, guaranteeing payment only once certain conditions were met. When the contract conditions were satisfied, the bank token was destroyed on-chain, while the actual fiat transfer occurred off-chain through Switzerland’s Interbank Clearing System.
This dual mechanism ensured legal enforceability. The blockchain acted as a transparent record of the transaction, while the off-chain transfer maintained continuity with existing financial systems. Importantly, no real client funds were exposed during the pilot, as the test used a simulated environment. The SBA emphasized that this achievement provides technical security and regulatory alignment. Every transaction could be audited, yet sensitive details remained protected through controlled access layers.
The successful tests highlight opportunities in programmable finance. Christoph Puhr, Digital Assets Lead at UBS, stated that interoperability between deposit money and blockchain platforms “has become a reality.” He added that the model unlocks innovation around tokenized assets and complex payment scenarios.
However, the study also outlined challenges. Scalability remains a concern because public blockchains like Ethereum face congestion and higher fees. The SBA suggested exploring other blockchains, such as Solana, or using layer-2 solutions to improve efficiency.
Regulatory clarity across jurisdictions will be crucial for cross-border adoption. Coordinating with infrastructure providers, central banks, and regulators must increase before such systems reach mass use. Banks will also need to modernize their infrastructure to fully support real-time digital settlement. Educational efforts are essential too, as financial institutions must understand and adapt to tokenized payment models beyond traditional systems.
This Swiss achievement comes as central banks worldwide test blockchain applications. Earlier this year, the US Federal Reserve Bank of New York and the Bank for International Settlements ran experiments using smart contracts. Their findings showed programmable tools could offer flexibility, though infrastructure challenges remain.
By completing the first legally binding blockchain payment, Switzerland strengthens its role as a global leader in digital finance. The SBA represents more than 265 banks and 12,000 individuals, and it intends to expand this study by involving more institutions and regulators.
The next steps include scaling the system, developing industry-wide standards, and publishing a full technical review. UBS and Sygnum already plan to integrate findings into asset tokenization and payment services, signaling potential rollouts in the coming years.
