Banks Move to Public Blockchain for Tokenized Cash
Major banks are abandoning permissioned private blockchains in favor of public blockchain infrastructure to build interoperable tokenized cash networks. Digital asset bank Sygnum reports growing institutional client demand is driving this strategic shift toward open, shared infrastructure.
Yuri Konnov
The trial, conducted under the umbrella of the Swiss Bankers Association, ran on the public Ethereum blockchain, though the tokens triggered off-chain conventional payments rather than on-chain settlement. The two use cases tested were interbank payments and an escrow mechanism for the settlement of tokenized asset transactions. Sygnum had partnered with UBS and PostFinance — a subsidiary of the state-owned Swiss Post — late last year to build out the proof of concept.
Thomas Frei, head of product innovation at Sygnum Bank, described the outcome as creating "a new form of payments on the blockchain, which is an alternative to stablecoins". The framing is deliberate: unlike stablecoins issued by non-bank entities, tokenized deposits remain on the issuing bank's balance sheet and are counted and reported as a conventional liability. That accounting treatment matters to compliance officers and prudential regulators evaluating whether tokenized cash instruments require new capital treatment.
The Swiss pilot sits within a broader institutional move away from the private-chain model that dominated the first wave of bank blockchain projects. JPMorganChase developed Quorum, a private permissioned blockchain based on Ethereum technology, in 2016. A decade later, the same institution arranged commercial paper issued by Galaxy Digital Holdings and purchased by Franklin Templeton and Coinbase using the public Solana blockchain. JP Morgan Asset Management also launched a tokenized money market fund on the public Ethereum blockchain. JPMorgan additionally launched a proof of concept for JPMD, a USD deposit token, on Coinbase's Base blockchain in June.
The European dimension adds further weight to the public-infrastructure thesis. Qivalis, a consortium of 37 of the European Union's largest banks, aimed to launch a digital euro before the end of 2026. Meanwhile, the Swiss tokenized deposit trial demonstrated that public-yet-permissioned models — where access controls sit at the application layer rather than the protocol layer — can satisfy both interoperability requirements and the compliance constraints that have historically pushed banks toward closed networks.
The "public-yet-permissioned" framing is central to how Sygnum and its partners are presenting the architecture. Permissioned access controls are applied at the smart-contract or application layer, allowing institutions to restrict counterparty eligibility while still settling on a public chain that any third-party auditor, regulator, or connected application can read. That design choice directly addresses the concern that public blockchains expose transaction data or allow unvetted participants — without requiring each institution to maintain its own validator set. Some early tokenized deposit consortia took the opposite approach: one five-bank group described by PCBB planned to start with a closed network where money moved only between their own customers.
Solana's throughput — reported by American Banker at over 25,000 transactions per second — has made it attractive for high-frequency settlement use cases, though the Swiss trial used Ethereum. The choice of chain appears to be use-case dependent rather than settled doctrine, and neither Sygnum nor its partners have publicly committed to a single protocol for future production deployments.
The immediate concrete effect of the Swiss trial is that UBS, PostFinance, and Sygnum have demonstrated legally binding interbank tokenized deposit payments on a public blockchain under Swiss Bankers Association oversight, with two specific use cases — interbank payments and tokenized asset escrow — validated in a proof-of-concept environment. What the trial does not establish is a live production network open to third-party banks, a disclosed timeline for commercial rollout, the specific permissioning standards or KYC framework applied to on-chain participants, or any confirmed extension of the model to cross-border jurisdictions outside Switzerland. The parties have not disclosed the volume of transactions processed, the legal enforceability mechanism applied in the event of on-chain failure, or how the architecture would interact with the European Central Bank's digital euro infrastructure being pursued by Qivalis.
