UBS and blockchain engineering firm Nethermind have completed two joint proofs of concept demonstrating that the public Ethereum network can meet the operational and compliance requirements of major financial institutions.
The tests showed that banks can apply strict compliance controls through the systems they operate on top of Ethereum without altering the underlying blockchain. In the first proof of concept, UBS and Nethermind configured an Ethereum node to enforce customizable compliance and risk rules, including restricting transactions to approved addresses and blocking interactions with certain smart contracts.
In the second, the teams built a component that routes bundles of approved transactions through relay services directly to selected builders, ensuring reliable inclusion on the blockchain. Both processes were successfully tested on the Sepolia network, and neither involved live transactions.
Andreas Kubli, group head of digital assets at UBS, said the results support the bank’s broader effort to build infrastructure for tokenized and digital assets. He noted that the tests show institutional‑grade controls can coexist with Ethereum’s open and neutral design and said UBS plans to continue developing the approach as the ecosystem evolves.
