The Swiss banking sector has achieved a milestone: for the first time, a legally binding payment has been executed using a public blockchain. This marks an important step in integrating traditional banks with innovative technologies such as smart contracts and tokenization.

How did it start for the Swiss bank?

Under the coordination of the Swiss Bankers Association (SBA), several major banks—UBS, Sygnum Bank, and PostFinance—collaborated to test blockchain in practice. The goal was to examine whether deposit tokens and blockchain-based payment infrastructure are suitable for making existing processes more efficient, secure, and transparent.

The test focused on two scenarios. In the first, a payment was executed between customers of the participating banks. Fiat money was transferred off-chain, but the payment instruction itself was recorded on the blockchain via a token. The second scenario went a step further: here, deposit tokens were automatically exchanged for tokenized real-world assets, similar to an escrow transaction.

Why this is significant

What makes this test so groundbreaking is that it represents the first legally binding bank payment settled via a public blockchain. It proves that blockchain technology is not only theoretical or experimental but can also meet the high standards of the financial sector, including regulatory compliance, technical security, and verifiable processes.

Opportunities and challenges for blockchain

Although the project confirms that interbank payments are indeed possible on the blockchain, some obstacles remain. The SBA indicates that scalability, in particular, requires further design adjustments and closer cooperation with other banks, infrastructure providers, and regulators.

Nevertheless, the significance is clear: the financial world is taking serious steps toward a system where traditional bank deposits and public blockchains can work together. This opens the door to more applications with tokenized assets and could bridge the gap between classical financial systems and the world of DeFi.

What does this mean for the future?

For both banks and investors, this test shows that blockchain technology no longer belongs exclusively to startups and crypto projects. Established institutions now also recognize its potential to streamline processes and enable new products.

With the first successful implementation in Switzerland, it is becoming evident that the future of finance will likely combine the best of both worlds: the reliability of traditional banks and the flexibility of blockchain technology.

Disclaimer: This is not financial advice. Always consider doing your own research and seek professional guidance.