UBS Investment Company on Tokenization: Service Shows Adoption Towards Decentralization

Swiss banking powerhouse UBS is steadily advancing its embrace of blockchain innovation, spotlighting the emerging bridge between traditional finance (TradFi) and decentralized technologies. 

The institution has now completed a proof-of-concept test for its Key4 Gold offering on the Ethereum layer-2 network ZKsync, marking another chapter in its exploration of tokenized financial assets.

This test simulation—conducted on ZKsync’s testnet—demonstrated UBS’s focus on leveraging zero-knowledge cryptography to improve scalability and privacy. 

The move signifies more than a technical milestone; it highlights growing institutional trust in decentralized frameworks, particularly those enabling secure and efficient asset tokenization.

What is UBS Key4 Gold and Why ZKsync?

UBS’s Key4 Gold product allows Swiss clients to purchase a direct claim to physical gold, with features such as fractional investment, real-time pricing, and optional physical delivery. 

While already operating within the private UBS Gold Network blockchain, UBS wanted to scale this offering without compromising confidentiality—a crucial requirement in client-facing financial services.

The solution? ZKsync, a zero-knowledge rollup developed by Matter Labs. This layer-2 technology increases transaction throughput and reduces costs while maintaining high privacy standards through cryptographic proofs. 

“They came to the conclusion that only zero-knowledge made sense for them,” said Pearl Imbach, Senior Business Development Manager at Matter Labs. She noted the test was conducted using ZKsync’s validium, a layer-2 framework where data is stored off-chain for improved privacy.

While the test does not confirm an imminent public launch, it showcases the bank’s openness to integrating decentralized technologies to strengthen its infrastructure. 

Imbach added, “Is this the right product [for UBS]? Perhaps not, but it's something we're just talking openly about.”

Read also: UBS Pioneers Blockchain-Based Gold Trading with Ethereum Integration

UBS Tokenize: Full-Service Entry to Decentralized Finance

In parallel with its testing of layer-2 scalability solutions, UBS has been rolling out UBS Tokenize, a comprehensive service designed to bring regulated financial assets into the world of decentralized finance (DeFi). 

This suite supports tokenization across asset classes including bonds, funds, and structured products—providing a secure gateway for issuers, investors, distributors, and data providers to interact with digital markets.

UBS Tokenize rests on four pillars:

1. Innovative Product Framework – Facilitating on-chain issuance while retaining regulatory compliance.
   
    
2. Blockchain-Agnostic Infrastructure – Integrates with multiple blockchain networks without vendor lock-in.
   
    
3. Regulatory Alignment – Designed to ensure legal compliance across jurisdictions.
   
    
4. Institutional-Grade Offering – Backed by UBS’s financial infrastructure and smart contract governance.
    

These features underscore the bank's commitment to not only experiment with blockchain technology but to reimagine the capital markets through secure, scalable, and compliant decentralized solutions.

TradFi's Embrace of Crypto Infrastructure

UBS isn’t alone in exploring blockchain’s potential. Just last December, Deutsche Bank also announced plans to build a layer-2 network with ZKsync’s technology, reinforcing a trend where major banks tap into Ethereum’s evolving infrastructure to power traditional financial offerings.

The message is clear: financial institutions no longer view blockchain as a threat, but as a complementary force to optimize legacy systems. “What we are offering now, with privacy on top [of the blockchain], is something that is super interesting,” said Imbach, referencing the increasing interest from other global banks in zero-knowledge solutions.

UBS’s approach differs, however, by taking a holistic view through UBS Tokenize—an initiative that looks beyond single experiments to a broader ecosystem for regulated digital asset interaction.

Read also: Is ZK the Next OM? Analyzing Recent Developments and Price Movement

Paving the Way Toward Decentralized Financial Systems

As UBS continues to explore ZKsync and builds out UBS Tokenize, it is contributing to a pivotal shift in financial markets. 

By blending privacy-preserving technologies with regulated financial products, the bank is paving a path for wider tokenization in capital markets.

Through services like UBS Tokenize and projects like Key4 Gold, UBS is showing that tokenized assets are not just a tech demo—they’re a viable part of the future financial system.

This shift signals that decentralization isn’t solely the domain of crypto-native startups. With players like UBS leading the charge, blockchain-based finance is increasingly becoming a collaborative effort between new-age innovation and traditional banking rigor.

FAQ

1. What is tokenization in the context of UBS?

Tokenization refers to the process of converting real-world financial assets—such as gold, bonds, or funds—into digital tokens on a blockchain. At UBS, this allows clients to hold fractional ownership of regulated assets with enhanced liquidity, transparency, and efficiency.

2. What is UBS Tokenize?

UBS Tokenize is UBS’s full-service platform that facilitates the creation, issuance, distribution, and custody of tokenized financial products. It enables institutional-grade, compliant access to decentralized markets for issuers, investors, distributors, and data providers.

3. What was UBS’s recent test involving ZKsync?

UBS completed a proof-of-concept test using ZKsync, a zero-knowledge Ethereum layer-2 technology, to simulate its Key4 Gold offering on a public blockchain. The goal was to explore scaling options while preserving user privacy.