Are Countries Using Ethereum As An Intermediary Settlement Layer Between Banks?
In the world of global finance, banks in different countries often struggle to send money quickly and cheaply to each other. Traditional systems rely on chains of middlemen, like correspondent banks, which add delays, high fees, and risks. Ethereum, the popular blockchain network known for smart contracts and decentralized apps, is stepping in as a potential fix. While no country has fully declared Ethereum as its official intermediary settlement layer for all bank transactions, major banks and financial groups worldwide are actively testing and building on it for faster cross-border settlements. Projects like Rayls, Swift partnerships, and DTCC pilots show Ethereum handling real money movements between institutions in ways that mimic or improve on old systems.
To understand this shift, picture how banks work today. When a bank in the United States wants to send money to a bank in Japan, it cannot just wire it directly. The US bank contacts a correspondent bank with ties to Japan, which then contacts another, and so on. Each step involves checking ledgers, reconciling records, and waiting for confirmations. This process can take days, cost a fortune in fees, and leave room for errors or fraud. Blockchain changes that by offering a shared digital ledger where everyone sees the same truth instantly. Ethereum stands out because it supports programmable money through smart contracts, which automate rules like payments only releasing when conditions are met.[1][3]
One key example comes from Rayls, a platform designed to bring banks onto blockchain without losing privacy or breaking rules. Banks cannot dump all their operations onto public Ethereum right away due to concerns over transparency and regulation. Public chains like Ethereum show every transaction to everyone, which exposes business secrets. Rayls solves this with a layered approach. First, banks connect in private networks using privacy nodes. Imagine ten banks forming a closed group. They share one ledger just among themselves for instant settlements on things like loans or payments. No outsiders peek in. This runs on Ethereum Virtual Machine technology, so Ethereum tools work seamlessly.[1]
Then there is the public layer. When these banks need to connect to the wider world, like tapping into global liquidity or DeFi markets, they bridge to Rayls public chain, which links to Ethereum. Everyone here passes Know Your Customer checks, keeping it compliant. Banks can tokenize assets, turning deposits, bonds, or receivables into digital tokens that move instantly while staying private. A feature called selective disclosure lets banks share details only with needed parties, like regulators or partners, without revealing everything. This fixes past privacy issues where tools were either fully hidden or fully open.[1]
Swift, the messaging network that coordinates most global bank payments, jumped in big time. On September 29, 2025, Swift partnered with Consensys, a top Ethereum software firm, and over 30 major banks to build a blockchain ledger for real-time cross-border payments. This combines messaging and settlement into one step, cutting out slow intermediaries. While not naming Ethereum outright, the setup points to it, as Ethereum powers most tokenized real-world assets. Analysts expect Ethereum or its layers because it holds about 66 percent of the 18.48 billion dollar tokenized asset market.[2]
The Depository Trust and Clearing Corporation, or DTCC, which settles trillions in US securities, is also on board. DTCC plans a service on approved Layer-1 and Layer-2 blockchains, with Ethereum as the likely pick due to its dominance. Tokens will move only between DTCC-registered wallets, with a master wallet for fixes if needed. This aims for settlements in minutes, not the current T plus 1 day, slashing costs by up to 90 percent and enabling 24/7 trading. DTCC tested this in Project Ion from 2020 to 2023, handling 100,000 transactions daily on distributed ledger tech. By April 2025, they launched a tokenized collateral platform for real-time work.[2]
Europe is moving fast too. Börse Stuttgart started Seturion on September 4, 2025, as the first pan-European platform for digital asset settlements. It connects trading spots across the continent, promising 90 percent cost cuts. While details on the chain vary, the trend favors Ethereum-compatible systems for their smart contract power.[2] In Germany, BaFin approved the first euro stablecoin under new MiCA rules on August 1, 2025. Issued by AllUnity, a venture with Deutsche Bank’s DWS, Flow Traders, and Galaxy Digital, it is an ERC-20 token on Ethereum. Built for banks, fintechs, and companies, it enables instant regulated euro payments across borders.[6]
Ethereum acts as this intermediary by serving as the settlement layer. In blockchain payments, one part handles addresses, checks, and user experience off-chain. The real magic happens on-chain during settlement. Funds transfer directly, confirm in blocks, and gain finality over time. No separate clearing needed. Banks verify everything independently. Stablecoins like USDC or this new euro token become the go-to for value, settling globally without prefunded accounts or nested intermediaries.[4]
Why Ethereum specifically? It reduces three big frictions in finance: authorization, reconciliation, and reporting. Institutions spend billions rebuilding these internally. Ethereum provides a shared ledger that updates in real time, programmable rules via smart contracts, and crypto proofs for enforcement. Banks still exist but build less plumbing. Issuance simplifies, custody secures, and operations lighten. It eliminates middlemen for global settlements in minutes, with automatic execution.[3][5]
Challenges remain, and countries are addressing them carefully. Public Ethereum congests during peaks, spiking fees and times, which banks hate for payments. Solutions include Layer-2 networks like rollups that batch transactions cheaply and fast on Ethereum. Irreversibility is another hurdle; wrong addresses mean lost funds. Fixes involve simulations, checksums, escrows, and app-level refunds.[4] Regulators are adapting. The Basel Committee reviewed crypto rules in November 2025, easing capital needs for stablecoins as adoption grows. US OCC approved five digital asset firms on December 12, 2025, signaling less reliance on correspondent banks.[6][8]
Countries themselves are not mandating Ethereum yet, but their banks and clearing houses are. In the US, DTCC and Swift pilots involve American giants. Europe’s MiCA framework greenlights Ethereum-based stablecoins for institutions. Asia and others join via Swift’s 30-plus banks. Ethereum becomes the backend, like the internet underpins web services. It records ownership, enables transfers, and enforces rules across borders cheaper and faster.[3]
Tokenization drives this. Banks turn real assets into tokens on Ethereum. Customer deposits become programmable. Bonds trade instantly. Receivables settle without paperwork. Rayls lets banks do this privately then bridge public. DTCC handles securities this way. Swift integrates payments. All EVM-based, so one set of tools works everywhere.[1][2]
Real-world use grows. Ethereum hosts most tokenized assets, from real estate to treasuries. Stablecoins settle payments daily in billions. Banks like Deutsche Bank issue on it. Platforms like Seturion link Europe. This is not hype; it is infrastructure shifting. Traditional ops had layers of fee-taking middlemen slowing everything