UBS Tests Tokenized Gold Product UBS Key4 Gold Using ZKsync Validium L2 Network

The Union Bank of Switzerland (UBS) is testing a new way to harness the advantages of blockchain technology. According to ZKsync, Switzerland’s largest bank is leveraging the tech to modernize digital gold investments for retail investors.

Swiss banking giant Union Bank of Switzerland (UBS) is testing a new way to harness the advantages of blockchain technology.

According to ZKsync, Switzerland’s largest bank is using the technology to modernize digital gold investments for retail investors.

Introducing UBS Key4 Gold

The Swiss bank, which has over $5.7 trillion in assets under management (AUM), has already completed a proof-of-concept (PoC) for the planned UBS Key4 Gold offering. The gold investment product, which is still in its experimental stage, uses ZKsync Validium, an Ethereum Layer-2 (L2) network.

The UBS Gold Network serves as the foundation for UBS Key4 Gold. Vaults, liquidity providers, and distributors are all connected by this permissioned blockchain. It provides the product with real-time pricing, deep liquidity, secure physical storage, and the option of delivery.

ZKsync Validium complements the platform by addressing scalability, privacy, and interoperability for the global expansion of the retail-focused product.

Alex Gluchowski, co-inventor of Zksync, stated that the project highlights UBS's efforts to integrate blockchain technology into its financial offerings and digital asset strategy. He also believes that ZK technology will play a crucial role in the financial revolution that is taking place on-chain.

“This PoC is a testament to the fact that ZKsync is the ideal home for tokenized assets, building Web3 without compromise,” Gluchowski said. "We are thrilled to play an integral role in the continued evolution of the space."

Meanwhile, Christoph Puhr, Digital Assets Lead at UBS Group, said that the new collaboration shows how the Swiss bank wants to stay at the cutting edge of financial innovation.

“Whilst tokenized securities hold a lot of potential to bring new solutions to our clients, scalability, privacy, and interoperability remain key challenges to overcome,” stated Puhr. "Our PoC with ZKsync showed that Layer 2 networks and ZK technology can solve these problems."

A follow-up to UBS Money Market Investment

The POC for UBS Key4 Gold comes shortly after the launch of the UBS USD Money Market Investment Fund Token (uMINT) last November. The tokenized investment fund also utilizes Ethereum’s distributed ledger technology (DLT).

Customers can use the platform to access cash management solutions at the institutional level within high-quality money market instruments. It is built on a conservative and risk-managed infrastructure.

The program uses both public and private blockchains to streamline its fund issuance and distribution. Moreover, the money market investment fund benefits from the knowledge that UBS has gained as an active industry partner in the Monetary Authority of Singapore's (MAS) Project Guardian initiative since 2023.