UBS, five banks open Swiss franc stablecoin sandbox

UBS and five other Swiss banks have launched a Swiss franc stablecoin sandbox in Switzerland to test tokenization of deposits and other assets. The pilot allows participating banks to mint, transfer and redeem tokenized representations of Swiss francs within a controlled environment.

The project will examine technical integration with existing banking systems, settlement finality, anti-money‑laundering and know‑your‑customer compliance, and interoperability between different token platforms. Banks will also test custody arrangements, reconciliation processes and the legal status of tokenized claims on deposits.

Participating institutions plan to run experiments that replicate core banking operations. Tests include issuing tokens that represent client deposits, settling securities transactions with tokenized cash and using programmable payment features such as conditional settlement. The work intends to show how distributed ledger technology can connect with traditional bank infrastructure while leaving central bank and commercial bank money unchanged.

Organizers framed the sandbox as a regulated, low‑risk setting for banks and service providers to learn how tokenization affects transaction speed, liquidity management and operations. Technology vendors and market infrastructure providers are expected to support ledger hosting, custody solutions and links to payment systems. The initiative is set to produce technical specifications and operational findings for use by participating institutions and regulators.

The sandbox follows earlier Swiss experiments that tested wholesale central bank digital currency models and securities tokenization. Those pilots examined settlement mechanics and legal frameworks and identified outstanding issues on interoperability and rules governing tokenized claims.

Experiments will operate under applicable Swiss banking and securities regulations and include controls to test reporting, transaction monitoring and client onboarding. The tests are planned for a limited period, after which participants will review results and consider next steps, including broader pilots or potential commercial services.