Swiss banks finalize first legally binding blockchain payment

Swiss banks UBS, Sygnum, and PostFinance have joined forces under the Swiss Bankers Association (SBA) to pilot a proof-of-concept (PoC) exploring the use of blockchain and smart contracts for interbank payments. The trial—marking what’s claimed to be the first legally binding bank payment via a public blockchain—focused on tokenizing bank deposits and using them in institutional payment infrastructure.

Key Findings

1. The study tested “deposit tokens,” blockchain-based instructions that trigger off-chain fiat transfers.
2. Two main use-cases were implemented: 1) Payments between customers of the participating banks using deposit tokens. 2) An escrow-style mechanism where deposit tokens were exchanged for tokenized real-world assets (RWAs), with automated transaction processing.
3. According to the SBA, this is the first time institutions have carried out a legally binding payment between banks using public blockchains and bank money.

Challenges & Outlook

• Although the feasibility was confirmed, scalability remains an issue. The SBA noted that further design changes and stronger collaboration among banks, infrastructure providers, and regulators are needed.
• UBS emphasized that interoperability between traditional banking deposits and public blockchains is now becoming attainable.

Significance

This development may accelerate the merging of traditional finance and decentralized finance (DeFi), as large banks increasingly explore blockchain‐based payment rails. For Switzerland, this could represent a pivotal step toward modernizing interbank payment systems while retaining legal clarity.