Programmable. Compliant. Interoperable

Deposit Tokens: Switzerland’s Step Toward Programmable Money

The Swiss Bankers Association (SBA), in collaboration with PostFinance, Sygnum Bank, and UBS, recently published the September 2025 Deposit Token Proof of Concept (PoC) Results Report—a milestone in regulated, blockchain-based finance. The PoC explored the feasibility of a blockchain-native token representing bank deposits, designed to be secure, interoperable, and programmable while fully compliant with Swiss financial regulations.

Bridging Traditional Banking and Blockchain

At the heart of the PoC lies the tokenized deposit model—an intermediate step toward a fully “native” Deposit Token. Importantly, this token is not a new form of money or a crypto asset, but a digital representation of a payment instruction under Swiss law (Art. 466 seq. CO). Its value is backed one-to-one by fiat deposits held in traditional banks.

Operationally, the system uses Mirror Accounts: each token minted on-chain corresponds to an off-chain debit in the bank’s ledger, while burning a token triggers a credit. This ensures that the bank retains ultimate control, preserving legal certainty while enabling blockchain programmability.

Practical Use Cases and Technical Implementation

The PoC demonstrated that multiple banks can interact on a shared Ethereum smart contract with permissioned access, while integrating with traditional interbank systems.

Key tested use cases include:

Peer-to-Peer (P2P) Transfers:
Clients of different banks can transfer Deposit Tokens directly between wallets. On-chain token transfers are synchronized with off-chain Swiss Interbank Clearing (SIC) settlements, achieving transaction finality once both banks confirm all checks.
Escrow / Delivery-versus-Payment (DvP) Transactions:
Conditional settlements, such as exchanging tokenized assets (e.g., wine tokens) for Deposit Tokens, were successfully executed using smart contracts. The atomic nature of these settlements eliminates counterparty risk, ensuring that both assets and deposits are transferred simultaneously.

Governance and compliance were tested rigorously:

Role-Based Access Control (RBAC) defined multiple roles (Platform Admin, Bank Authority, Bank Operator) with distinct responsibilities for technical, institutional, and operational governance.
AML, CTF, and sanctions screening were applied at every off-chain SIC settlement step without measurable delays, confirming that legal compliance can coexist with efficient blockchain transactions.

Current Limitations

While the PoC proved feasibility, it also revealed key constraints:

Dependence on off-chain banking infrastructure limited decentralization.
Lack of direct core banking integration required manual reconciliation.
Compatibility with fully tokenized ecosystems was constrained by the non-blockchain-native design.

These limitations underscore that the tokenized deposit is only a first step, and broader adoption will require deeper blockchain integration.

The Vision for a Native Deposit Token

The long-term goal is a Native Deposit Token, where the blockchain itself becomes the authoritative ledger. Recommended enhancements include:

On-chain Master Records: Shift deposit records fully on-chain to improve transparency and efficiency.
Central Bank Integration: Direct access to SNB/SIC DLT or wholesale CBDCs (wCBDC) to streamline settlement and reduce reliance on off-chain reconciliation.
Integrated Identity Layer: Deploy Layer 2 or certified third-party solutions for KYC/AML compliance, potentially leveraging Zero-Knowledge Proofs (ZKP) to maintain privacy while meeting regulatory requirements like the Travel Rule.

Strategic Implications

Switzerland’s Deposit Token PoC demonstrates that regulated institutions can issue programmable, interoperable digital deposits without compromising compliance. This positions the country at the forefront of digital financial infrastructure, providing a model for other jurisdictions exploring tokenized money.

A fully native Deposit Token could transform the financial ecosystem by:

Enabling programmable money across regulated institutions.
Facilitating interoperable transactions beyond traditional bank networks.
Reducing operational and counterparty risk through atomic settlements.

Independent researcher | Blockchain, ML, Financial Systems | Remote Dharma