UBS Explores Blockchain to Revolutionize Digital Gold Investments for Retail Investors

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Switzerland’s largest bank, UBS, is taking a major step in integrating blockchain technology into traditional finance by experimenting with digital gold investments for retail investors.

With over $5.7 trillion in assets under management, UBS has successfully completed a proof-of-concept for its fractional gold investment product, UBS Key4 Gold, on the Ethereum layer-2 network ZKsync Validium.

By leveraging zero-knowledge proofs (ZK-proofs), this blockchain-based infrastructure ensures higher throughput transactions and improved data security while keeping transaction costs low.

The adoption of ZKsync Validium allows UBS to enhance the scalability, privacy, and interoperability of its digital gold offering.

UBS Key4 Gold was originally built on the bank’s proprietary UBS Gold Network, a permissioned blockchain that connects vaults, liquidity providers, and distributors.

The move reflects UBS’s ongoing efforts to explore blockchain’s potential in financial markets, signaling a shift towards onchain finance.

UBS Continues to Explore Blockchain Tech

Alex Gluchowski, the inventor of ZKsync, emphasized the importance of blockchain in modernizing finance. This belief aligns with UBS’s recent blockchain initiatives, including its tokenized fund on Ethereum launched in November 2024, which was designed to integrate Ether (ETH) into traditional financial systems.

However, by shifting the solution to ZKsync Validium, the bank aims to increase transaction privacy, enhance interoperability, and optimize transaction speeds through offchain data storage.

These enhancements could make ZKsync’s Ethereum-native scaling solutions more attractive to institutional players, enabling them to leverage blockchain without the typical concerns over high fees and network congestion.

ZKsync has ambitious goals for 2025, aiming to process 10,000 transactions per second (TPS) while reducing transaction fees to just $0.0001.

A report by the Global Financial Markets Association (GFMA) and Boston Consulting Group estimates the global value of tokenized illiquid assets will reach $16 trillion by 2030. Even more conservative estimates from Citigroup suggest that $4 trillion to $5 trillion worth of tokenized digital securities could be minted by 2030.

Confidential computing is another emerging solution that could drive institutional blockchain adoption.

Confidential Computing Another Emerging Solution