UBS and Nethermind have proven that public Ethereum is ready for banking standards
Switzerland's largest bank, UBS, in collaboration with the development team Nethermind, has successfully completed two pilot projects, clearly demonstrating that the public Ethereum network can meet the strict operational and regulatory requirements imposed on regulated financial institutions. This is a landmark step towards the mass adoption of blockchain infrastructure in traditional banking.
The essence of the tests conducted was to prove that banks can implement their own compliance and risk control mechanisms on top of Ethereum without modifying the network protocol itself. This approach preserves the openness and neutrality of the public blockchain, making it compatible with the institutional finance ecosystem.
How the Pilot Projects Worked
In the first phase, UBS and Nethermind configured an Ethereum node to apply customizable compliance and risk management rules. These rules included: restricting transactions to only pre-approved addresses and blocking certain interactions with smart contracts. This gave the bank direct control over which operations even enter the network's mempool.
In the second phase, an infrastructure component was developed that routes batches of approved transactions through relay services directly to selected block builders. This ensured a reliable and predictable process for including transactions in the blockchain. The entire end-to-end process was successfully tested on the Sepolia testnet, confirming the stability of processing and recording transactions that meet the specified criteria.
Key takeaway: A bank can manage its own infrastructure with built-in control mechanisms — over which operations are sent, how, and through which counterparties they pass — without altering the public Ethereum protocol.
Looking at the Results
As noted by Andreas Kübli, 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 emphasized that the pilots demonstrated the value of close collaboration between UBS and Nethermind in shaping the next generation of blockchain infrastructure.
In his assessment, the results show that institutional-level control and compatibility with a public network are achievable without compromising its openness and neutrality. Kübli added that the bank highly values Nethermind's technical expertise and will continue to develop this work as the ecosystem evolves.
Tomáš Kurowski, Head of Corporate at Nethermind, in turn, emphasized that implementing control mechanisms at the infrastructure level proved that institutional requirements can be met without compromising the network's openness and compatibility. Both companies plan to advance this direction as technology and the regulatory environment evolve.
Cryptalist Commentary: This is not just another PoC. UBS and Nethermind have demonstrated a working template for integrating TradFi into DeFi without compromises. If such solutions scale, we will see major banks begin using Ethereum as a settlement layer for tokenized assets, rather than building isolated blockchains. This could become a catalyst for the next wave of institutional adoption.