Swiss Banking Giant UBS Brings Gold Trading to Blockchain With Ethereum
2025-02-01
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Swiss banking giant UBS has successfully tested its UBS Key4 Gold product on ZKSync, an Ethereum Layer-2 network.
This move highlights the increasing adoption of blockchain technology by traditional financial institutions seeking efficiency and security.
UBS Integrates ZKSync for Blockchain-Based Gold Trading
On January 31, ZKSync reported that UBS, which manages assets worth $5.7 trillion, is exploring how blockchain can streamline gold investments.
The test focuses on allowing the bank’s Swiss customers to purchase physical gold directly through a blockchain-based system while ensuring scalability, privacy, and interoperability.
UBS Key4 Gold enables retail investors to buy fractional gold shares, offering real-time pricing, deep liquidity, and secure storage. The product operates on the UBS Gold Network, a permissionless blockchain that connects vaults, liquidity providers, and distributors.
To optimize efficiency, UBS leveraged ZKSync’s Validium mode. It’s a zero-knowledge rollup solution that enhances scalability by storing data off-chain.
As part of the proof-of-concept, the bank deployed smart contracts on the Validium testnet to simulate the UBS Gold Network. These contracts facilitated gold token issuance and transaction processing.
“This PoC reflects UBS’ continued efforts to explore how blockchain can enhance its financial offerings and support its broader digital asset strategy. I firmly believe that the future of finance will take place onchain,” wrote Alex Gluchowski, inventor of ZKsync.
The testnet also enhanced privacy by restricting participants’ visibility to their transactions while maintaining verification mechanisms.
Additionally, it allowed stablecoin to merge with Ethereum, making gold token purchases more cost-effective and scalable.
Growing Institutional Interest in Blockchain Solutions
UBS’ test reflects a broader shift toward blockchain adoption in traditional finance (TradFi). The bank has previously explored tokenization by launching an Ethereum-based money market investment fund.
UBS’ Digital Assets Lead Christoph Puhr noted that tokenized securities hold great potential, but scalability, privacy, and interoperability remain hurdles. He highlighted that the ZKSync PoC showcased how Layer-2 networks and zero-knowledge technology can help address these challenges.
“This is another great example of how UBS collaborates with technology providers to stay at the forefront of innovation. Our PoC with ZKsync demonstrated that Layer 2 networks and ZK technology hold the potential to resolve these,” Puhr noted.
ZKSync co-inventor Alex Gluchowski echoed this sentiment while pointing out that these initiatives show that the future of finance is on-chain.
According to him, zero-knowledge technology would serve as a catalyst for innovation and provide a robust foundation for tokenized assets, which could accelerate Web3 adoption.