What if you could invest in gold as easily as sending a crypto transaction? UBS, Switzerland’s largest bank, is making that a reality with its blockchain-powered gold investment product, UBS Key4 Gold. The financial giant, managing over $5.7 trillion in assets, has successfully completed a proof-of-concept (PoC) for its Ethereum Layer-2 (L2) zkSync Validium-based solution. This initiative aims to modernize digital gold investments for retail investors, leveraging blockchain to enhance scalability, privacy, and interoperability.
UBS and Blockchain-Powered Gold Investment
UBS Key4 Gold was initially developed on UBS Gold Network, a permissioned blockchain designed to connect vaults, liquidity providers, and distributors in the gold investment ecosystem. However, with its move to zkSync Validium, UBS is now exploring public blockchain technology to offer higher efficiency and transparency for retail investors.
Alex Gluchowski, the inventor of zkSync, emphasized the significance of this development, stating:
“I firmly believe that the future of finance will take place on-chain, and ZK technology will be the catalyst for growth.”
Why UBS Chose zkSync Validium
zkSync Validium is a zero-knowledge rollup (ZK-rollup) solution designed to scale Ethereum while maintaining privacy and security through off-chain data storage. By adopting this L2 scaling solution, UBS aims to:
- Enhance privacy – Ensuring sensitive transaction details remain confidential.
- Increase scalability – Processing high-throughput transactions without overloading Ethereum’s mainnet.
- Boost interoperability – Facilitating seamless integration with other blockchain ecosystems.
This move aligns with a broader trend of real-world asset (RWA) tokenization, which is gaining traction among institutional investors looking to digitize traditional financial instruments.
Institutional Adoption and the Future of Blockchain Privacy
UBS’s blockchain-based proof-of-concept follows its previous launch of a tokenized fund on Ethereum in November 2024, demonstrating a clear commitment to integrating digital assets into mainstream finance.
Beyond scalability, privacy remains a critical concern for financial institutions entering the blockchain space. Remi Gai, founder of Inco, highlighted this challenge at the FHE Summit 2024, stating:
“Institutions are still having a hard time entering the space because everything is transparent. If you enable an experience similar to Web2, suddenly, this could bring more liquidity, use cases, bigger participants, and money to enter the space.”
Privacy-enhancing technologies like fully homomorphic encryption (FHE) and confidential computing could unlock trillions in institutional capital, allowing financial firms to securely operate on public blockchains without exposing sensitive data.
zkSync’s Ambitious Targets for 2025
Looking ahead, zkSync is aiming to process over 10,000 transactions per second (TPS) while reducing fees to $0.0001 per transaction. If achieved, these improvements could make Ethereum-native ERC-20 assets more scalable than ever, further incentivizing institutions like UBS to expand their blockchain-powered financial products.
Final Thoughts
UBS’s integration of zkSync Validium on Ethereum for gold investments represents a major step toward institutional blockchain adoption. By leveraging ZK technology, the bank is ensuring faster transactions, enhanced privacy, and global accessibility for retail investors looking to digitally own fractional gold.
As blockchain privacy and scalability solutions continue to evolve, the financial sector is entering a new era where traditional assets seamlessly merge with decentralized technology. UBS’s pioneering efforts in on-chain gold investment could pave the way for broader institutional adoption of real-world asset tokenization, further bridging the gap between traditional finance and blockchain innovation.
