Swiss banks complete first blockchain-based legally binding payment

UBS, Sygnum Bank and PostFinance completed a blockchain study proving the technology’s efficacy for bank deposits and institutional payment infrastructure.

Some of Switzerland’s largest banks completed a proof-of-concept (PoC) that tested blockchain technology and smart contracts for interbank payments, marking what they said was the first legally binding bank payment via a public blockchain.

Under the umbrella of the Swiss Bankers Association (SBA), UBS, PostFinance and Sygnum Bank conducted a feasibility study on blockchain-based deposit tokens and payments infrastructure, the SBA announced Tuesday.

The test initiated an offchain fiat money transfer triggered by payment instructions tokenized on the blockchain as a “deposit token.” The first use case executed a payment between bank customers of the participating banks, while the second tested an escrow-like process that exchanged deposit tokens for tokenized real-world assets (RWAs) with automatically processed transactions.

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