Swiss Banks Execute First Legally Binding Blockchain Payment, Marking a Major Fintech Milestone

UBS, Sygnum Bank, and PostFinance have successfully executed Switzerland’s first legally binding interbank payment on a public blockchain, proving that smart contracts and tokenized deposits can meet strict regulatory standards.

• UBS, PostFinance, and Sygnum Bank complete a proof-of-concept for blockchain-based interbank payments.
• Transaction used tokenized “deposit tokens” to trigger offchain fiat money transfers.
• First legally binding bank payment executed via a public blockchain in Switzerland.
• Smart contracts enabled verifiable processes and regulatory compliance.
• Scalability challenges remain, requiring broader collaboration with banks and regulators.
• Study signals growing institutional adoption of blockchain for payments and real-world assets.

Some of Switzerland’s largest financial institutions have taken a bold step toward merging traditional banking with decentralized technology. Under the Swiss Bankers Association (SBA), UBS, Sygnum Bank, and PostFinance completed a proof-of-concept that tested how blockchain and smart contracts can support interbank payments. The project culminated in what the participants describe as Switzerland’s first legally binding bank-to-bank payment using a public blockchain network.

The pilot relied on “deposit tokens,” a blockchain-based representation of bank deposits, to trigger an offchain fiat money transfer. Two primary use cases were demonstrated: a direct payment between customers of the participating banks, and an escrow-like process in which deposit tokens were exchanged for tokenized real-world assets (RWAs). Both transactions executed automatically through smart contracts, showcasing how programmable finance can streamline settlement while maintaining legal enforceability.

According to the SBA, the PoC highlights how smart contracts can provide verifiable processes, strong technical security, and full compliance with regulatory requirements. Public blockchains with permissioned applications were shown to support legally binding payments—a milestone that many observers believe could reshape the future of cross-bank settlement systems. Christoph Puhr, UBS Group’s digital assets lead, said the study proves that interoperability between traditional bank deposits and public blockchains “can become a reality,” allowing innovation around tokenized assets and pushing the boundaries of modern financial systems.

While the trial confirms the feasibility of blockchain-based institutional payments, the SBA cautioned that scalability still requires significant design enhancements and greater collaboration with other banks, infrastructure providers, and regulators. Without broader participation, moving from a successful PoC to large-scale adoption will be challenging.

The development underscores a growing trend of traditional financial institutions exploring blockchain for payment rails and asset tokenization. Central banks in the United States and Europe are conducting similar research. In May, a joint study by the U.S. Federal Reserve Bank of New York’s Innovation Center and the Bank for International Settlements (BIS) Innovation Hub Swiss Centre found that smart contracts could help central banks deploy flexible, rapid-response tools in a tokenized financial ecosystem. The BIS reported that its hypothetical scenarios demonstrated the “fast and flexible” nature of smart contracts, while also noting that current infrastructure lacks advanced features needed for large-scale implementation.

Founded in 1912, the SBA represents over 265 banking organizations and more than 12,000 individual members, making it one of Switzerland’s most influential financial bodies. By leading this initiative, the SBA and its partner banks are sending a strong message: blockchain technology is not just an experimental tool but a viable framework for secure, legally enforceable interbank transactions.

Final Thought

This milestone by UBS, Sygnum, and PostFinance marks a critical point in the convergence of traditional banking and blockchain. If scalability challenges can be addressed, Switzerland’s pioneering legally binding blockchain payment may inspire other global financial institutions to adopt decentralized infrastructure for high-value, cross-border settlements.