UBS and Nethermind have completed two joint proofs of concept (PoC) demonstrating that the public Ethereum network can support the operational and compliance needs of regulated financial institutions.
The firms said the milestone represented an important step toward making Ethereum infrastructure more accessible to heavily regulated financial organisations.
The tests showed that banks can apply strong compliance checks through the systems they run on top of Ethereum, without changing how Ethereum itself works.
As a result, the network remains open and neutral, and ensures the solution remains compatible with the wider Ethereum ecosystem, while meeting the necessary compliance requirements of larger financial institutions – taking us a step closer to bridging the gap between public networks and institutional-grade infrastructure.
The two proofs of concept were specifically designed to enforce compliance at two stages of Ethereum transaction broadcasting.
First, they configured an Ethereum node to apply customisable compliance and risk rules – such as restricting transactions to pre-approved addresses and blocking certain smart contract interactions.
Second, they developed a component that routes bundles of approved transactions through relay services directly to select builders, ensuring reliable inclusion on the blockchain.
This end-to-end process was successfully tested on the Sepolia test network, confirming that compliant transactions were consistently processed and recorded. Neither PoC involved live transactions.
Overall, the work shows that a bank can run its own infrastructure with compliance controls in place when transactions are submitted, as well as how and by which counterparties they are processed – without changing the public Ethereum protocol.
Both UBS and Nethermind said they plan to build on this work as the technology and regulatory environment continue to develop.
Andreas Kubli, group head of digital assets at UBS, said: “At UBS, we are building the core infrastructure to support tokenised assets and digital assets, always guided by a client-led and responsible approach. These proofs of concept demonstrate the value of close collaboration between UBS and Nethermind in shaping the next generation of compliant blockchain infrastructure.
“Together, we co-designed the approach, aligned on technical and governance requirements, and validated solutions end-to-end. The results show that institutional-grade controls and public-network interoperability can be achieved without compromising Ethereum’s openness or neutrality.
“We value Nethermind’s technical expertise and will continue to build on this work as the ecosystem evolves,” he added.
Tomasz Kurowski, head of enterprise business at Nethermind, said: “These two proofs of concept reflect Nethermind’s institutional strategy of delivering enterprise-grade Ethereum infrastructure, built on deep protocol and client expertise.
“By implementing compliance controls at the infrastructure layer, we have shown that institutional requirements can be met without compromising Ethereum’s openness or interoperability. UBS has been a great partner throughout this work, pragmatic, thoughtful, and clearly at the forefront of institutional digital asset adoption. These results provide a strong foundation for further joint development and broader partnership.”
