The study utilized a shared Ethereum smart contract with role-based controls, enabling multi-bank fungibility and compliance checks for AML, CTF, and sanctions.

The proof-of-concept showcased blockchain-enabled interbank fiat transfers and tested an escrow-like process involving tokenized real-world assets, highlighting innovative use of DLT.

UBS's digital assets lead, Christoph Puhr, emphasized that this demonstrates the potential for interoperability between traditional bank deposits and public blockchains, fostering innovation in tokenized assets.

The test revealed scalability challenges for larger financial systems, indicating the need for further design adjustments.

Switzerland's financial sector marked a major milestone with the completion of a Deposit Token feasibility study by the Swiss Bankers Association, PostFinance, Sygnum Bank, and UBS, demonstrating blockchain-based legally binding payments across institutions.

Current limitations include reliance on off-chain core banking systems, manual integrations, and non-native blockchain design, with future plans to explore native on-chain records and connections to wholesale CBDC or RTGS systems.

While successful, the Swiss Bankers Association noted scalability issues and stressed the importance of collaboration among banks, infrastructure providers, and governments to advance DLT-based payments.

In the US, central banks like the Federal Reserve Bank of New York and the BIS are exploring smart contracts and blockchain infrastructure, recognizing their potential despite existing infrastructure challenges.

Settlement finality was achieved through Swiss Interbank Clearing (SIC), with on-chain smart contracts on a permissioned Ethereum blockchain facilitating the process.

This was the world's first trade finance transaction using third-party payment across banks on a public DLT, demonstrating smart contracts' role in ensuring safety and compliance.

Two successful use cases included a customer-to-customer payment and an escrow-like exchange of deposit tokens for tokenized assets, both executed automatically.

This development could accelerate blockchain adoption in regulated financial transactions, promoting innovation in tokenized assets and decentralized finance.