1️⃣ The Big Reveal
UBS, PostFinance, and Sygnum – under the Swiss Bankers Association – just executed the first legally binding interbank payment on a public blockchain.
Not a test. Not a pilot. A real transaction, settled in Swiss francs.
2️⃣ Why It Matters
This wasn’t about creating new crypto assets. The project used sight deposits – the most basic form of fiat money in bank accounts.
The twist: their transfer was triggered on-chain via deposit tokens, acting as programmable payment instructions.
⚡ Instant. 24/7. Automated.
👉 A fundamentally different model than stablecoins, which are independent crypto-assets pegged to fiat.
3️⃣ Strategic Edge
- Deposit tokens* don’t create new money – they provide the on-chain trigger to move existing fiat deposits securely between banks.
- Counterparty risk is covered – banks confirmed they can use this model without additional exposure.
- Unlike JPMorgan’s closed system, Switzerland proved that cross-bank interoperability is possible – a shared infrastructure, not a silo.
4️⃣ Global Signal
This is about reinventing the payment infrastructure itself: showing that blockchain rails can complement or even substitute legacy systems like SWIFT.
For Switzerland – sometimes seen as losing its early blockchain edge – it’s a strong sign of renewed innovation power.
5️⃣ The Big Question
The PoC shows that digital settlement doesn’t need to run only on stablecoins (and certainly not on a CBDC) – often hyped as the default path.
Deposit tokens* offer a regulated, interoperable alternative built directly on fiat money.
📌 How will banks worldwide integrate into this new Swiss Franc Deposit Token model of institutional money movement?
*) Legally, the Deposit Token was structured as a digital representation of a payment instruction under Swiss law, avoiding complex constructs such as ledger-based securities or assignment of claims. It does not constitute a new form of money or a crypto asset, but rather a standardized instruction to debit and credit traditional bank accounts. Technically, the token was implemented rather represents a standardized instruction via a shared smart contract on Ethereum, with role-based access control and full auditability.
Switzerland’s successful on-chain settlement is a landmark moment, moving the debate from theoretical pilots to real-world execution. The key innovation here isn’t just the token itself, but the proof that core financial plumbing can operate on a decentralized, interoperable model.
However, if we zoom out, the deposit token is a powerful application running on a new set of rails. The fundamental question now becomes: is the underlying infrastructure ready for this revolution? To truly unlock the potential of a 24/7, programmable financial system, we must move beyond the limitations of centralized cloud systems, which introduce the very single points of failure this new model aims to eliminate.
Ultimately, this isn’t just an upgrade to payment systems; it’s the blueprint for a new financial fabric. Architecting this future requires building on an infrastructure that shares its core principles: decentralization, security, and limitless scale. This is the next frontier.
Thank you Kai for sharing your additional insights – Indeed, decentralization is key, and over the entire architecture