Swiss Banks Complete First Cross-Bank Ethereum Payments

In a move that could reshape how traditional finance interacts with public blockchains, three major Swiss banks have completed the country’s first cross-bank payment using Ethereum. 

The Swiss banks, UBS, PostFinance, and Sygnum Bank teamed up for the pilot. This marks a significant milestone in the exploration of tokenized deposits. At the heart of the experiment were deposit tokens. These are regular bank deposits converted into blockchain-based tokens. 

These digital representations allowed customers to send and settle payments instantly across different banks. This is something industry players have been eager to test for years.

“This is genuinely new territory,” explained Thomas Frei, Head of Product Innovation at Sygnum. “For the first time, our tokenized deposits could be transferred seamlessly across multiple banks. That wasn’t possible before.”

Why This Matters: An Alternative to Stablecoins

Stablecoins have long dominated crypto payments, pegged to fiat currencies like the U.S. dollar. But this Swiss initiative introduces a fresh alternative; regulated, bank-issued tokens backed by real deposits. 

Unlike JPMorgan’s deposit tokens, which are limited to its internal network, the Swiss model allows cross-bank usability, reducing counterparty risk and broadening potential applications.

“This feels like the launch of a new payment model on the blockchain,” Frei added. “It works much like stablecoins but with direct backing from banks.”

What Comes Next

The Swiss Bankers Association (SBA) believes such tokens could pave the way for instant, final settlement of payments on shared infrastructure. Even more, they could integrate into automated business processes, unlocking new efficiencies for global finance.

Still, this isn’t ready for mass rollout just yet. Frei noted that further work is required before the technology can move beyond the pilot phase. But the feasibility study sends a strong signal: blockchain-based payments are inching closer to becoming mainstream in the world of regulated banking.

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