Swiss banking giant UBS has launched gold trading on blockchain, the bank has successfully tested its UBS Key4 Gold product on ZKSync, an Ethereum Layer-2 solution, marking a major milestone in the intersection of gold trading on blockchain and traditional finance.
This development underscores the increasing adoption of blockchain technology by financial institutions looking for efficiency, security, and scalability.
With gold trading on blockchain gaining momentum, UBS is setting a precedent for institutional investors exploring on-chain asset tokenization.
UBS Integrates ZKSync for Blockchain-Based Gold Trading
On January 31, ZKSync revealed that UBS, which manages over $5.7 trillion in assets, is actively exploring how blockchain can streamline gold investments.
The test aims to provide UBS’ Swiss customers with the ability to purchase physical gold through a blockchain-based system, ensuring seamless transactions while maintaining privacy and interoperability.
UBS Key4 Gold allows retail investors to buy fractional gold shares, offering real-time pricing, deep liquidity, and secure storage. The product operates on the UBS Gold Network, a permissioned blockchain connecting vaults, liquidity providers, and gold distributors.
To optimize efficiency, UBS utilized ZKSync’s Validium mode, a zero-knowledge rollup solution that enhances scalability by storing data off-chain.
As part of the proof-of-concept (PoC), UBS deployed smart contracts on the Validium testnet to simulate the UBS Gold Network. These contracts facilitated the issuance of gold-backed tokens and transaction processing in a highly secure environment.
“This PoC reflects UBS’ continued efforts to explore how blockchain can enhance its financial offerings and support its broader digital asset strategy. I firmly believe that the future of finance will take place on-chain,” said Alex Gluchowski, co-founder of ZKSync.
Key Features of Gold Trading on Blockchain via UBS
The UBS experiment with gold trading on blockchain provides several advantages:
Fractional Ownership – Investors can buy small portions of physical gold instead of entire bars.
Real-Time Pricing & Liquidity – A blockchain-powered system ensures instant pricing updates and deep liquidity.
Enhanced Privacy – Transactions remain confidential, visible only to authorized participants.
Scalability & Cost-Efficiency – Smart contracts reduce transaction fees and processing time.
Moreover, UBS’ trial also enabled stablecoins to merge with Ethereum, making gold token purchases more affordable and scalable.
Growing Institutional Interest in Blockchain-Based Gold Trading
UBS’ successful test underscores the broader institutional shift toward blockchain adoption. The bank previously ventured into tokenized securities by launching an Ethereum-based money market investment fund.
Christoph Puhr, UBS’ Digital Assets Lead, emphasized the significance of tokenization, stating:
“This is another great example of how UBS collaborates with technology providers to stay at the forefront of innovation.
Our PoC with ZKSync demonstrated that Layer-2 networks and ZK technology hold the potential to resolve scalability, privacy, and interoperability challenges.”
Why Blockchain is Transforming Gold Trading
The gold trading market has traditionally relied on centralized entities such as banks and commodity exchanges. However, blockchain’s decentralized nature offers a trustless, transparent, and efficient alternative.
Key Reasons Why Blockchain is Ideal for Gold Trading.
Security & Transparency: Blockchain records transactions immutably, reducing fraud.
Elimination of Middlemen: Direct transactions lower costs and settlement times.
Interoperability with Digital Assets: Tokenized gold can be used in DeFi platforms and stablecoin ecosystems.
According to Alex Gluchowski, ZKSync’s co-founder, blockchain-based assets will soon become mainstream:
“Zero-knowledge technology is a game-changer for tokenized assets. It provides a robust foundation for innovation and could accelerate Web3 adoption.”
The Future of Gold Trading on Blockchain
As more institutions explore blockchain technology, UBS’ initiative could serve as a blueprint for other banks and investment firms.
By leveraging Ethereum’s Layer-2 networks, UBS is demonstrating that gold trading on blockchain can be secure, cost-effective, and accessible to a wider investor base.
With increasing institutional adoption, gold-backed digital assets could become a key investment class, integrating seamlessly with DeFi, stablecoins, and tokenized securities.
The success of UBS’ Key4 Gold experiment signals a paradigm shift in gold trading. By embracing Ethereum’s ZKSync technology, UBS is proving that gold trading on blockchain is not just a concept—it’s the future.
With major financial players like UBS stepping into blockchain-powered assets, the world is witnessing a new era of digitized gold investments.
Gold trading on blockchain is no longer a vision—it’s happening now. Get more from The Bit Gazette
