Swiss Banks Complete First Blockchain Payment

PostFinance, UBS, Sygnum Bank, and the Swiss Bankers Association (SBA) have carried out Switzerland’s first legally binding interbank payment on a blockchain.

The trial tested a ‘deposit token,’ which is a digital version of traditional bank deposits placed on a public blockchain. Unlike cryptocurrencies, the deposit token is backed by regulated banks, ensuring compliance with financial safeguards and depositor protection.

Two scenarios were explored during the study. The first was payments between customers of different banks, and the second was an automated exchange of assets.

Both tests showed that transactions can be carried out securely, transparently, and within Swiss legal frameworks. In addition, the payments are binding, demonstrating for the first time that blockchain-based transfers can be applied across banks in practice.

Alexander Thoma, head of digital assets at PostFinance, said:  “The Deposit Token offers great potential for making payment transactions more efficient and secure for all parties in the future. The feasibility study has shown that blockchain technology works for this and is legally viable.”

The test was launched because, while today’s payment systems are fast and efficient, they are reaching their limits with new digital business models. Therefore, the deposit token aims to solve this by bringing bank deposits onto the blockchain. It would allow round-the-clock payments that are seamlessly integrated into digital processes and fully automated.

Following the test, the banks said the next phase will focus on refining the deposit token and working more closely with other banks and authorities. The goal is to make the benefits of blockchain-based payments available to Swiss customers.

Thomas Eichenberger, deputy CEO of Sygnum, added: "Blockchain technology will bring about lasting change to the financial market and payment system. We are demonstrating the potential of this technology using concrete implementation examples. The aim is to drive innovation and create long-term added value for the Swiss financial center."