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Swiss Banks Execute First Legally Binding Payment on Public Blockchain

Swiss Banks Execute First Legally Binding Payment on Public Blockchain

UBS, PostFinance, and Sygnum Bank have successfully conducted a legally binding payment using tokenized deposits on Ethereum, demonstrating the potential for blockchain adoption in interbank payments.

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Fact Check
The evidence strongly supports the statement. Source 9, dated July 2021, details an event where Sygnum Bank, a regulated Swiss bank, tokenized a Picasso painting. The source explicitly states that 'transactions on the blockchain [are] considered legally binding' under Swiss DLT law. This directly confirms a Swiss bank executed a legally binding transaction (a form of value transfer/payment) on a blockchain, and it is presented as a 'world's first'.
    Reference: 123
Summary

Swiss banks UBS, Sygnum, and PostFinance have successfully executed the first legally binding interbank payment using tokenized deposits on a public blockchain as part of a feasibility study. The payment utilized Ethereum-based deposit tokens, representing real bank deposits, which were transferred between participating banks. The trial confirmed the technical and legal feasibility of using blockchain for interbank payments, though scalability and broader adoption will require further testing and infrastructure development. The banks noted that while deposit tokens offer a programmable alternative to stablecoins, additional work is needed to ensure scalability and regulatory compliance.

Terms & Concepts
  • Deposit Token: A blockchain-based token representing a claim on bank deposits, enabling digital transfers backed by fiat currency.
  • Ethereum: A decentralized blockchain platform enabling programmable smart contracts and tokenized transactions beyond cryptocurrency.
  • Smart Contracts: Self-executing agreements on a blockchain where terms are directly written into code, automating conditional processes like settlements.