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Swiss-based major bank UBS announced the completion of its proof of concept for the Key4 Gold service built on the Ethereum 
$2,521-based ZKsync layer-2 network. This development signifies the bank’s growing commitment to leveraging blockchain technology for innovative financial solutions.
Renewed Interest in Blockchain
The simulations conducted on the ZKsync test network are interpreted as a sign of renewed interest from traditional financial institutions in blockchain technology. Previously, UBS launched a tokenized money market investment fund, uMint, built on Ethereum.
The Key4 Gold service allows Swiss clients to directly own physical gold. This service enables bulk gold investments through features such as real-time pricing, deep liquidity, secure physical storage, and optional physical delivery.
Privacy and Scalability
While the project operates on UBS’s private blockchain, the team explored ways to maintain privacy while enhancing scalability. Pearl Imbach, Senior Business Development Manager at Matter Labs, stated, “They decided that only zero-knowledge proof (ZK) methods made sense for them, and thus wanted to implement this in practice using an existing product.”
“The services we now offer with added privacy on blockchain are very interesting, and we are increasingly implementing such use cases.” – Imbach.
ZKsync is a type of layer-2 scaling system aimed at increasing transaction speed and reducing costs via zero-knowledge rollups. Validium, similar to rollups, stores transaction data off-chain. The test operation suggests that UBS may closely examine layer-2 technologies to support some of its activities, though it has not disclosed whether it will launch its own layer-2 network.
In December, Deutsche Bank announced plans to build a layer-2 solution using ZKsync technology. This indicates that blockchain technology could align with products from traditional financial institutions.
UBS’s Key4 Gold project reflects financial institutions’ efforts to offer clients more flexible and secure investment options through blockchain technology.
