UBS, a major Swiss bank, has tested its blockchain-based gold investment product called UBS Key4 Gold on the Ethereum Layer-2 network, ZKSync.
This trial used ZKSync’s Validium mode, which allows for secure and private transactions while enabling fractional gold purchases. This step shows how traditional financial institutions are increasingly adopting blockchain for asset tokenization.
On January 31, ZKSync announced that UBS, which manages $5.7 trillion in assets, is looking into blockchain to make gold investments easier. The test allows Swiss customers to buy physical gold through a secure blockchain system that emphasizes efficiency and privacy.
UBS Key4 Gold lets retail investors buy fractional shares of gold. This offers real-time pricing, strong liquidity, and secure storage. The platform operates on the UBS Gold Network, a permissionless blockchain that connects vaults, liquidity providers, and distributors.
To improve efficiency, UBS utilized ZKSync’s Validium mode. This zero-knowledge rollup enhances scalability by keeping data off-chain. During the trial, UBS deployed smart contracts on the Validium testnet to simulate the UBS Gold Network. These contracts facilitated gold token issuance and transaction processing while ensuring security.
Alex Gluchowski, the inventor of ZKSync, stated that this proof-of-concept shows UBS’s commitment to using blockchain to enhance financial services. He believes the future of finance will be on-chain.
The testnet also improved privacy by allowing participants to see only their own transactions while maintaining verification systems. It also enabled stablecoin integration with Ethereum, making gold token purchases more affordable and scalable.
UBS’s blockchain test is part of a larger trend among financial institutions exploring blockchain technology. The bank has previously launched an Ethereum-based money market investment fund.
Christoph Puhr, UBS Digital Assets Lead, noted that while tokenized securities have great potential, challenges like scalability and privacy remain. He emphasized that ZKSync’s proof-of-concept showed how Layer-2 networks can help overcome these issues.
