UBS and Nethermind have proven that Ethereum is ready for banking standards.
Switzerland's largest bank, UBS, together with the development team Nethermind, conducted two pilot projects that clearly demonstrate: the public Ethereum network is capable of meeting the strict operational and regulatory requirements imposed on traditional financial institutions. This is not just an experiment — it is a crucial step towards making Ethereum's infrastructure accessible to major banks.
The tests showed that banks can successfully integrate their own compliance and risk management mechanisms while working on top of Ethereum, without altering the network itself. This approach keeps the network open and neutral, and the solution itself fully compatible with the broader Ethereum ecosystem.
How the pilots worked
UBS and Nethermind tested compliance at two key stages of sending transactions to the Ethereum network. First, they configured an Ethereum node to apply customizable compliance and risk management rules. Among these rules were restricting transactions to only pre-approved addresses and blocking interactions with certain smart contracts. This allows the bank to control which operations enter the network.
In the second stage, the companies developed a component that directs bundles 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. This confirmed that compliant transactions are consistently processed and recorded.
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 they pass — without altering the public Ethereum protocol.
Comments from participants
According to Andreas Kubli, Head of Digital Assets at UBS, the bank is 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.
In the expert's assessment, 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 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 environment evolve. According to the companies, 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.
My analysis: This case is not just a technical success. It is a signal to the market that Ethereum is transitioning from the status of an "experimental playground" to a full-fledged institutional infrastructure. The ability to embed compliance at the node level without breaking decentralization is exactly what is needed for mass adoption by traditional financial giants. The next logical step is real transactions with real assets.