Tokenized Deposits Mark a First for Switzerland’s Big Banks

The Swiss Bankers Association has revealed that three of the country’s major financial institutions, including UBS, have carried out Switzerland’s first binding payment using tokenized bank deposits on a public blockchain.

The pilot, conducted by PostFinance, Sygnum Bank, and UBS, explored how conventional bank deposits can be represented as digital tokens and transferred securely across a blockchain network. These “tokenized deposits” are essentially traditional funds given a digital wrapper, allowing them to move between banks with the same finality and security as on-ledger assets.

During the trial, participating clients sent blockchain-based tokens that mirrored their bank balances to settle transactions directly with one another. According to project lead Daniel Frey, this marks a significant advance: “Our tokenized deposits can now be used across different banks, something that wasn’t possible before.”

Frey noted that while institutions such as JPMorgan Chase have already created internal tokenized deposits, those remain confined to their own systems. The Swiss initiative, by contrast, demonstrated cross-bank interoperability and effective management of counterparty risk.

“What we have effectively launched is a new category of blockchain payment,” Frey added, positioning the solution as a practical alternative to stablecoins, digital assets whose value is typically pegged to a currency, commodity, or other financial instrument.

The Swiss Bankers Association said the experiment points toward a future where payments can be settled instantly and irrevocably over shared infrastructure.

Such a framework could be integrated directly into automated business processes, boosting efficiency and reducing the need for manual intervention.

Despite the successful test, Frey emphasized that further development is needed before the product can be rolled out at scale. Still, the proof-of-concept underscores how traditional banking can merge with cutting-edge blockchain technology, laying the groundwork for faster and more seamless financial transactions.