Three Swiss banks – UBS, PostFinance and Sygnum – have completed a tokenized deposit trial under the umbrella of the Swiss Bankers Association. The proof of concept (PoC) was conducted on the public Ethereum blockchain, although the tokens triggered off-chain conventional payments. Future iterations plan to explore natively digital deposit tokens.
The trial addresses limitations in current payment infrastructure. Despite the existence of an efficient Swiss payment system, the banks see a need to be able to use smart contracts to program payments and would like the ability to transfer larger amounts around the clock.
The two use cases trialed included interbank payments and an escrow mechanism for the settlement of tokenized asset transactions. Results demonstrated both the technical and legal feasibility of the solution. From a legal perspective, in order to be treated as a conventional payment, the token is a digital representation of a payment instruction.
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