UBS Explores Blockchain to Revolutionize Digital Gold Investments for Retail Investors

Switzerland’s largest bank, UBS, is taking a major step in integrating blockchain technology into traditional finance by experimenting with digital gold investments for retail investors.

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

The adoption of ZKsync Validium allows UBS to enhance the scalability, privacy, and interoperability of its digital gold offering.

By leveraging zero-knowledge proofs (ZK-proofs), this blockchain-based infrastructure ensures higher throughput transactions and improved data security while keeping transaction costs low.

UBS Continues to Explore Blockchain Tech

The move reflects UBS’s ongoing efforts to explore blockchain’s potential in financial markets, signaling a shift towards onchain finance.

UBS Key4 Gold was originally built on the bank’s proprietary UBS Gold Network, a permissioned blockchain that connects vaults, liquidity providers, and distributors.

However, by shifting the solution to ZKsync Validium, the bank aims to increase transaction privacy, enhance interoperability, and optimize transaction speeds through offchain data storage.

Alex Gluchowski, the inventor of ZKsync, emphasized the importance of blockchain in modernizing finance.

In a January 31 post on X (formerly Twitter), he stated, “I firmly believe that the future of finance will take place onchain, and ZK technology will be the catalyst for growth.”

This belief aligns with UBS’s recent blockchain initiatives, including its tokenized fund on Ethereum launched in November 2024, which was designed to integrate Ether (ETH) into traditional financial systems.

ZKsync has ambitious goals for 2025, aiming to process 10,000 transactions per second (TPS) while reducing transaction fees to just $0.0001.

These enhancements could make ZKsync’s Ethereum-native scaling solutions more attractive to institutional players, enabling them to leverage blockchain without the typical concerns over high fees and network congestion.

Privacy remains a major concern for institutions entering the blockchain space.

Remi Gai, founder of Inco, highlighted this challenge during the FHE Summit 2024, stating that “institutions struggle with blockchain’s transparency”.

He suggested that privacy-enhancing technologies, such as fully homomorphic encryption (FHE), could unlock new liquidity and bring larger financial players into the crypto ecosystem.

Confidential Computing Another Emerging Solution

Confidential computing is another emerging solution that could drive institutional blockchain adoption.

These technologies allow financial institutions to process encrypted transactions without exposing sensitive data, a feature that could unlock trillions of dollars in capital for the crypto sector.

A report by the Global Financial Markets Association (GFMA) and Boston Consulting Group estimates the global value of tokenized illiquid assets will reach $16 trillion by 2030 .

Even more conservative estimates from Citigroup suggest that $4 trillion to $5 trillion worth of tokenized digital securities could be minted by 2030.

Recognizing this potential, major companies are making significant moves in the tokenization space.

Goldman Sachs, for instance, plans to launch three new tokenization products later this year, driven by growing client interest.