Swiss bank UBS trials blockchain-based digital gold on ZKsync
Switzerland’s biggest bank, UBS, is taking a step into the future by experimenting with blockchain technology to make digital gold investments more accessible to retail investors.
The bank, which manages over $5.7 trillion in assets, has successfully tested a blockchain-based version of its fractional gold investment product, UBS Key4 Gold. This proof-of-concept was created using ZKsync Validium, an Ethereum layer-2 (L2) network that enhances scalability, privacy, and interoperability – all of which are critical for global product expansion.
Alex Gluchowski, the creator of ZKsync, sees this move as part of UBS’s ongoing exploration into blockchain’s potential to enhance financial services. He believes that finance will inevitably shift on-chain, with zero-knowledge (ZK) technology playing a critical role in that transition.
According to Cointelegraph, originally, UBS Key4 Gold was developed on the bank’s own UBS Gold Network, a permissioned blockchain linking vaults, liquidity providers, and distributors. However, shifting to ZKsync Validium is expected to bring greater privacy, smoother interoperability, and faster transactions by storing data off-chain.
This blockchain experiment comes on the heels of another major move by UBS – its launch of a tokenised fund on Ethereum in November 2024. That initiative aimed to integrate Ether (ETH) more deeply into traditional finance, signalling the bank’s broader commitment to blockchain technology.
ZKsync’s big plans for 2025: Faster transactions, lower fees
ZKsync is not just a side project; it has ambitious goals for 2025. The team aims to process 10,000 transactions per second (TPS) while slashing transaction fees to nearly zero ($0.0001).
Using zero-knowledge proofs (ZK-proofs), the L2 scaling method improves Ethereum’s security, privacy, and efficiency. These enhancements could make ZKsync’s technology more interesting to developers working with Ethereum-based ERC-20 tokens.
Could privacy tech drive institutional crypto adoption?
One of the biggest hurdles for financial institutions entering the crypto space is the lack of privacy. That’s where privacy-focused technologies like fully homomorphic encryption (FHE) come in.
At the 2024 FHE Summit, Remi Gai, founder of Inco, pointed out that institutions hesitate to adopt blockchain because of its transparency. He believes that if blockchain solutions can guarantee the same level of privacy as traditional finance, they will attract more liquidity and institutional participation.
Confidential computing technologies – such as FHE, which allows computations on encrypted data without decrypting it – could be a game changer. Gai even suggests that advancements in this field might free up an additional $1 trillion in capital for the crypto industry.
With banks like UBS experimenting with blockchain and privacy tech that is evolving, the future of institutional crypto adoption is starting to take shape.
(Photo by Unsplash)
See also: Apollo and Securitize team up for launch of tokenised access to credit fund
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