Switzerland Reaches a New Milestone: Bank Payments on Blockchain with Deposit Tokens

Under the aegis of the Swiss Bankers Association (SBA), three of Switzerland’s leading banking institutions – UBS, PostFinance, and Sygnum – have achieved an unprecedented milestone: the first legally binding interbank payment transaction using deposit tokens on a public blockchain under full regulatory supervision.

This achievement marks a turning point for the Swiss financial system, demonstrating the feasibility of a true digital infrastructure for the Swiss franc and paving the way for a new era of blockchain-based financial services.

Beyond the Limits of Traditional Systems

The Swiss domestic payments system is already recognized for its efficiency and convenience. However, traditional methods show significant limitations when it comes to new applications: conventional payments are not programmable, are not available 24/7 for high-value transfers, and face difficulties integrating with blockchain-based ecosystems.

The representation of bank deposits on blockchain promises to overcome these obstacles, enabling immediate and final transactions on a shared infrastructure and directly integrating them into automated business processes.

Smart Contracts and Automation: The Future of Payments

The adoption of programmable rules through smart contracts on this new infrastructure makes it possible to execute payments only when certain conditions are met. This approach reduces risks, increases efficiency, and accelerates more complex transactions.

Automation also opens the door to new digital services: in the future, customers will benefit from fast, secure, and transparent payment processes, whether in securities trading, automated settlement of insurance claims, or machine-to-machine transactions without human intervention.

Deposit Tokens: Proof of Concept and Results

The Proof of Concept (PoC) focused on the off-chain transfer of fiat currency, triggered by tokenized payment instructions on the blockchain via deposit tokens.

Two main use cases were tested: a payment between clients of participating banks and an escrow-like process in which deposit tokens were exchanged for tokenized assets, with transactions processed automatically.

The system’s governance is based on clearly defined roles and the use of smart contracts, ensuring verifiable processes, technical security, and regulatory compliance.

The results confirm that a deposit token used between multiple banks – according to the model described in the PoC – works technically on a public blockchain with permissioned applications and can trigger legally binding payments.

Technical and Legal Feasibility Confirmed

The final report confirms the technical and legal feasibility of the project. The ability to conduct payments between different institutions via blockchain is now a reality, but scalability will require further design adjustments and greater collaboration with other banks, infrastructure providers, and authorities.

This work is part of the association’s strategy on “digital currencies” and aims to generate tangible benefits for the Swiss economy, society, and banking customers.

Voices of the Protagonists

Martin Hess, Chief Economist SBA
Martin Hess, head of the SBA’s Digital Currencies project, emphasizes that the deposit token represents “a strategic step toward the future and highlights the innovative potential of the Swiss financial center.” The success of the Proof of Concept sets the course for further developments toward a new form of digital payment.

Alexander Thoma, Head Digital Assets PostFinance
Alexander Thoma highlights the great potential of the deposit token to make payment transactions more efficient and secure for all parties involved. “The proof of concept has demonstrated that blockchain technology works for this purpose and is legally valid.

We are determined to continue on this path, bringing PostFinance’s expertise in payments and digital assets to the table.”

Thomas Eichenberger, Deputy CEO Sygnum Bank
For Thomas Eichenberger, Sygnum was founded on the belief that blockchain would sustainably revolutionize the financial market and payment systems. “Together with partners such as UBS and PostFinance, we are demonstrating the potential of this technology with concrete examples, with the aim of driving innovation and creating lasting added value for the Swiss financial center.”

Christoph Puhr, Digital Assets Lead UBS Group
Christoph Puhr of UBS stresses that the Proof of Concept demonstrates how the interoperability of bank money via public blockchains can become a reality, enabling innovation in tokenized assets and helping shape the future of financial systems both nationally and globally.

Future Outlook: Collaboration and Scalability

The success of the PoC is only the first step. To achieve full scalability and fully harness the potential of deposit tokens, strengthening collaboration among banking institutions, infrastructure operators, and regulatory authorities will be essential.

The goal is to build an open and interoperable platform capable of welcoming new players and offering increasingly innovative and secure services.

The Swiss Bankers Association: A Hub of Expertise and Innovation
Founded in Basel in 1912, the Swiss Bankers Association today represents around 265 organizations and 12,000 professionals.

The association promotes open markets, entrepreneurial freedom, and fair competitive conditions, establishing itself as a competence center for the banking sector and an active player on future-oriented issues.

Conclusions: A New Standard for Digital Finance

The completion of the Proof of Concept on deposit tokens sets a new standard for the integration of digital currencies into regulated financial services.

These are not simple synthetic “wrappers” but true on-chain representations of bank deposits, ready to revolutionize the way banks, companies, and citizens will handle payments in the near future. Switzerland, once again, confirms itself at the forefront of financial innovation, laying the foundations for a more efficient, secure, and transparent system.

For further details and to view the full feasibility report, please visit swissbanking.ch.