UBS Advances Gold Tokenization with Blockchain Test on ZKsync Network

• UBS tests ZKsync blockchain for tokenized digital gold.
• Zero-knowledge proofs ensure scalability and privacy.
• Traditional banks expand use of blockchain and tokenization.

UBS, Switzerland’s largest bank and a global financial giant, has recently completed a proof of concept for its gold investment product, UBS Key4 Gold, using the Layer-2 Ethereum blockchain technology ZKsync Validium. The initiative is part of the bank’s strategy to explore digital solutions that enhance efficiency, financial security and privacy in traditional financial transactions.

. @UBS , Switzerland's largest bank, is modernizing digital gold investments on @ZKsync .

In a PoC for UBS Gold, they tested ZKsync Validium. The goal: To address scalability, privacy, and interoperability for global expansion.

Let's dive in👇 pic.twitter.com/4SW2xOfRlS

— ZKsync (∎, ∆) (@zksync) January 31, 2025

UBS Key4 Gold is designed to enable retail investors to acquire fractions of physical gold more easily. The integration with the ZKsync network represents a significant step forward by offering faster transactions, lower costs and a high level of security. The test used smart contracts to simulate the operation of the UBS Gold Network, which is responsible for connecting vaults, liquidity providers and distributors, all within a secure and scalable blockchain environment.

The technology chosen for the experiment was Validium, a variation of the zero-knowledge rollup that stores data off-chain, which contributes to increased processing capacity without compromising the privacy of information. This model allows only the parties involved in the transactions to have access to specific details, while the integrity of the data is preserved through cryptographic checks.

Alex Gluchowski, inventor of ZKsync, highlighted the importance of the project for the future of digital finance. According to him, the UBS initiative reinforces the role of blockchain technology as a fundamental pillar for the modernization of financial services. “I firmly believe that the future of finance will happen on-chain, and ZK technology will be the catalyst for this growth,” said Gluchowski.

UBS has already shown interest in digital assets by launching a tokenized money market investment fund based on the Ethereum network. However, the new test with Key4 Gold indicates an evolution in the bank's strategy, which seeks to consolidate the use of blockchain beyond cryptocurrencies, exploring its potential in tangible asset markets, such as gold.

UBS’s move is part of a broader trend among traditional financial institutions that are increasingly embracing blockchain technology. Large banks such as JPMorgan, Citi, Deutsche Bank and State Street are also investing in blockchain-based solutions to improve the efficiency of their operations and reduce costs associated with traditional processes.

Christoph Puhr, Head of Digital Assets at UBS, noted that while the potential for asset tokenization is huge, significant challenges remain related to scalability and network interoperability. “Our proof of concept with ZKsync has demonstrated that Layer-2 networks and zero-knowledge technology can be the key to overcoming these challenges,” said Puhr.

The success of the trial suggests that UBS is considering expanding the use of ZKsync technology to other financial products, which could further accelerate blockchain adoption in the banking sector. While the bank has yet to confirm plans for a large-scale implementation, the experiment indicates that the path to digitizing traditional assets is increasingly solidified, signaling a profound transformation in the way the financial market operates.