UBS Explores Blockchain for Digital Gold Investments

UBS, Switzerland’s largest bank, is experimenting with blockchain technology to modernize digital gold investments for retail investors.

With $5.7 trillion in assets under management, UBS has completed a proof-of-concept for its fractional gold investment product, UBS Key4 Gold, built on ZKsync Validium, an Ethereum layer-2 (L2) network.

By leveraging ZKsync, UBS aims to enhance scalability, privacy, and interoperability, paving the way for the product’s global expansion.

How UBS Key4 Gold Uses Blockchain

Originally, UBS Key4 Gold was built on the bank’s permissioned UBS Gold Network, which connects:
✅ Vaults
✅ Liquidity providers
✅ Distributors

However, running it on ZKsync Validium brings additional benefits:
📈 Higher transaction throughput
🔒 Enhanced privacy through off-chain data storage
🌍 Interoperability with Ethereum-based ecosystems

“I firmly believe that the future of finance will take place onchain, and ZK technology will be the catalyst for growth,” said ZKsync inventor Alex Gluchowski in a Jan. 31 X post.

https://twitter.com/zksync/status/1885329183448195087

UBS’ Broader Blockchain Push

This move follows UBS’ launch of a tokenized fund on Ethereum in November 2024, demonstrating its commitment to integrating blockchain into traditional finance.

UBS isn’t alone in embracing institutional blockchain adoption. The demand for privacy-preserving and scalable solutions is rapidly increasing.

ZKsync has ambitious targets for 2025, including:
🚀 Processing 10,000 transactions per second (TPS)
💰 Reducing transaction fees to $0.0001

These advancements could make Ethereum-based financial products more appealing to institutions.

Privacy & Institutional Adoption: The Next $1 Trillion Opportunity?

Privacy remains a major hurdle for institutional blockchain adoption.

According to Remi Gai, founder of Inco, privacy-preserving technologies could unlock the next $1 trillion in capital for crypto.

Speaking at the FHE Summit 2024, Gai highlighted:

“Institutions are still having a hard time entering the space because everything is transparent. If you enable an experience similar to what they’re comfortable with in Web2, suddenly, this could bring more liquidity, use cases, bigger participants, and money into the space.”

Confidential computing and fully homomorphic encryption (FHE) are emerging as solutions that allow computations on encrypted data without decryption, enhancing security for financial institutions.

The Future of Blockchain-Based Finance

UBS’ blockchain initiatives signal growing institutional confidence in decentralized finance (DeFi).

With ZKsync scaling Ethereum, privacy-enhancing technologies maturing, and institutional adoption accelerating, the next evolution of blockchain-based finance is unfolding.

As banks, asset managers, and fintech firms explore blockchain, UBS Key4 Gold could become a blueprint for future blockchain-powered investment products.