Ethereum has passed the banking test: UBS and Nethermind confirm compliance with regulatory requirements
Swiss banking giant UBS, together with the Nethermind development team, has completed two pilot projects that clearly demonstrate: the public Ethereum network is capable of meeting the strict operational and regulatory requirements imposed on regulated financial institutions. This is not just another experiment — it is a crucial step towards making Ethereum infrastructure truly accessible to the world's largest banks.
How the pilot projects work
The key innovation is that banks can implement strict compliance mechanisms through their own systems operating on top of Ethereum, without making changes to the network protocol itself. Essentially, UBS and Nethermind have developed an architecture where the network remains open and neutral, while the solution is fully compatible with the broader Ethereum ecosystem.
In the first phase, specialists configured an Ethereum node to apply customizable compliance and risk management rules. These rules include restricting transactions to only pre-approved addresses and blocking certain interactions with smart contracts. This gives the bank full control over which operations are submitted to the network.
In the second phase, the companies developed a component that routes batches of approved transactions through relay services directly to selected block builders, ensuring reliable inclusion in the blockchain. The entire end-to-end process was successfully tested on the Sepolia testnet, confirming stable processing and recording of compliant transactions.
It is important to emphasize: none of the pilots involved real transactions. The work demonstrated that a bank can manage its own infrastructure with built-in control mechanisms — over which operations are sent, how, and through which counterparties — without altering the public Ethereum protocol.
Participant comments and future outlook
According to Andreas Kubli, head of digital assets at UBS, the bank is purposefully building the foundational infrastructure to support tokenized and digital assets, focusing on client interests and a responsible approach. He noted that the pilots demonstrated the value of close collaboration between UBS and Nethermind in shaping the next generation of blockchain infrastructure.
The results show that institutional-level control and compatibility with the public network are achievable without compromising Ethereum's openness and neutrality. Kubli added that the bank highly values Nethermind's technical expertise and will continue to develop this work as the ecosystem evolves.
Nethermind's head of corporate, Tomasz Kurowski, emphasized that the two pilots reflect the company's institutional strategy to build enterprise-grade Ethereum infrastructure. According to him, implementing control mechanisms at the infrastructure level proved that institutional requirements can be met without compromising the network's openness and compatibility.
UBS and Nethermind plan to advance this work as technology and the regulatory landscape evolve. The collaboration shows that new technologies in the digital asset space can bring tangible benefits to risk management and compliance with strict regulatory requirements, even in decentralized public networks.
Expert opinion: This case is a powerful signal for the entire institutional market. For a long time, it was believed that public blockchains were incompatible with banking compliance. UBS and Nethermind have not only debunked this myth but also proposed a ready-made architecture that could become the standard for integrating TradFi with DeFi. Now the question is not "can it be done," but "who will be next."