UBS and Nethermind Prove Public Ethereum Can Meet Institutional Controls

UBS and Nethermind have successfully completed two Ethereum compliance proofs of concept on Sepolia, demonstrating that public blockchain infrastructure can meet institutional requirements without demanding protocol-level changes. The tests used a customized Ethereum node to apply compliance and risk rules before outgoing transactions reached the network in one trial, while another proof of concept focused on routing approved transactions through relay services to selected block builders.

The first test applied compliance rules to outgoing transactions using a customized Ethereum node, which restricted transfers to approved wallet addresses or blocked smart contract activity based on internal policy requirements. This approach gives banks more control over their infrastructure while keeping Ethereum's base layer open and unchanged.

In the second trial, UBS and Nethermind built a routing tool for approved transaction bundles, sending them through relay services to selected block builders. The process was tested end-to-end on Sepolia, where approved transactions were processed and recorded in a safe environment.

Andreas Kubli, UBS Group Head of Digital Assets, stated that institutional-grade controls and public-network interoperability can be achieved without compromising Ethereum's openness or neutrality. These trials suggest that regulated firms may not need private networks for every use case, strengthening Ethereum's institutional case.