TL;DR
- UBS and Nethermind completed two Ethereum compliance proofs of concept on Sepolia without live funds or mainnet transactions.
- One test used a customized Ethereum node to apply compliance and risk rules before outgoing transactions reached the network.
- The second routed approved transaction bundles through relays to selected block builders, suggesting regulated firms may use public Ethereum while keeping controls above the base layer for institutional blockchain deployments.
UBS and Nethermind have completed two Ethereum compliance proofs of concept on Sepolia, giving institutional users a new argument for public blockchain infrastructure without demanding protocol-level changes. The tests used Ethereum’s public test network and did not involve live funds or mainnet transactions, which makes the outcome cautious but still notable. The puzzle is that Ethereum’s openness is being framed as compatible with bank-grade controls, not as the obstacle regulated firms must avoid when building tokenization, settlement or digital asset services across open blockchain rails inside regulated financial markets.
UBS and Nethermind have completed two joint proofs of concept showing that a public, permissionless network can support the compliance and operational needs of regulated financial institutions.
The PoCs show that banks and asset managers can apply strong compliance controls… pic.twitter.com/uJuDGPupGn
— Nethermind (@Nethermind) June 23, 2026
The first trial used a customized Ethereum node that applied compliance and risk rules to outgoing transactions before they reached the network. Those rules could restrict transfers to approved wallet addresses or block smart contract activity based on internal policy requirements. That structure gives banks more control through their own infrastructure while keeping Ethereum’s base layer open, public and unchanged. In practical terms, compliance can sit above Ethereum instead of inside Ethereum, preserving neutrality while giving regulated firms a familiar screening layer for access control, policy enforcement and transaction review.
Public Networks Meet Institutional Control Requirements
The second proof of concept focused on how approved transactions move toward block production. 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. That makes transaction routing part of the compliance stack, because institutions are not only checking whether activity is allowed, but also managing how approved activity reaches blockchain infrastructure before final inclusion under more predictable operational conditions.
Andreas Kubli, UBS Group Head of Digital Assets, said institutional-grade controls and public-network interoperability can be achieved without compromising Ethereum’s openness or neutrality. That statement goes to the heart of the institutional debate: banks and asset managers want access, screening and transaction controls, but public chains were designed to remain permissionless. These trials suggest they may not need private networks for every use case. For Ethereum, the successful tests strengthen its institutional case, though only as a proof of concept for now. The next challenge is moving from controlled testnet validation to live deployments where compliance, neutrality and operational risk must coexist under real market conditions at meaningful institutional scale globally.
