UBS and Nethermind Test How Banks Can Use Ethereum Compliantly

UBS and Nethermind have successfully completed two joint proofs of concept (PoC) demonstrating that the public Ethereum network can support the operational and compliance requirements of regulated banks.

The testing showed that financial institutions can implement robust compliance controls through systems run on top of the network without altering the underlying blockchain protocol.

This allows the network to remain open and neutral while meeting institutional risk management standards.

The collaboration focused on enforcing compliance at two critical stages of Ethereum transaction broadcasting.

First, the teams configured an Ethereum node to apply custom risk rules, including restricting transactions to pre-approved addresses and blocking specific smart contract interactions.

Second, they developed a component to route approved transaction bundles directly to selected builders through relay services. This ensures reliable blockchain inclusion.

The end-to-end process was validated on the Sepolia test network using no live transactions.

“These proofs of concept demonstrate the value of close collaboration between UBS and Nethermind in shaping the next generation of compliant blockchain infrastructure,”

said Andreas Kubli, Group Head of Digital Assets at UBS.

He added that the results demonstrate that institutions can achieve controls and public network interoperability without compromising openness.

Tomasz Kurowski, Head of Enterprise Business at Nethermind, said:

“By implementing compliance controls at the infrastructure layer, we have shown that institutional requirements can be met without compromising Ethereum’s openness or interoperability.”

Featured image credit: Edited by Fintech News Switzerland, based on image by mkmult via Magnific

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