Securing a Swiss franc on public infrastructure: the CHFD security audit

Summary

• Swiss Stablecoin AG develops CHFD, a fully regulated Swiss franc stablecoin backed one-to-one by franc deposits at Swiss banks.
• CHFD is a digital representation of the Swiss franc issued on the Ethereum blockchain.
• ChainSecurity is an ETH Zurich spin-off that has audited smart contracts since 2017, with a methodology refined during its years within PwC Switzerland. ChainSecurity counts Circle and Tether among its clients: the two largest stablecoin issuers in the world, and together around 80% of all stablecoins in circulation.

Security and trust are fundamental to any financial infrastructure. As we explore the potential of a Swiss franc stablecoin, we are pleased to work with ChainSecurity - a Swiss company with globally recognised expertise in blockchain security, to assess the technology underpinning CHFD and help ensure it is built on a strong foundation.

 

Pascale Bruderer, Founder & Chairwoman, Swiss Stablecoin AG

September 2026

Stablecoins: a question of sovereignty

Stablecoins are digital representations of official currencies, issued by private companies rather than central banks. With over $300bn in circulation and almost all of it denominated in US dollars, they have stopped being a fringe phenomenon and become a question of monetary sovereignty.

As Christine Lagarde, President of the European Central Bank, put it:

The US Administration explicitly describes [its federal stablecoin regulation: the GENIUS ACT] as a tool to ensure “the continued global dominance of the U.S. dollar” and to cement demand for US Treasuries. The terms of the debate have shifted with it. It is no longer about whether stablecoins should exist, but whether jurisdictions can afford to be without them.

 

Christine Lagarde, President, European Central Bank

May 2026

Swiss Stablecoin AG

Swiss Stablecoin AG was founded in 2022 to prepare for the launch of a regulated Swiss franc stablecoin and to help drive the necessary changes to the legal framework. Through the platform it has developed, the company aims to enable innovative payment applications and business models that complement the regulated Swiss payment infrastructure with greater functionality, thereby also strengthening its resilience and sovereignty. The CHFD, as the core product, is at the heart of the platform: a fully-backed Swiss franc stablecoin linked to both the financial sector and the real economy.

The CHFD has been live since summer 2026 and is being used to verify several use cases for established Swiss financial institutions as part of a Sandbox collaboration. In September 2026, the Sandbox initiative - in which Swiss Stablecoin is partnering with UBS, PostFinance, Zürcher Kantonalbank, Raiffeisen, BCV, Sygnum Bank, SIX and TWINT - entered a controlled live test phase. The CHFD is backed 1:1 by deposits held with a Swiss bank, with reserves held entirely in cash during the sandbox phase.

CHFD is an important step in exploring what a Swiss franc stablecoin could enable, and an opportunity to explore how digital money can serve the Swiss economy.

How CHFD works

Stablecoins use public blockchains, such as Ethereum, to represent currencies digitally. The rules governing how the digital currency is issued, held and transferred are defined by smart contracts: programs that run on the blockchain and enforce those rules by design.

CHFD’s smart contracts fall into two parts:

• one maintains the ledger and implements the CHFD token itself;
• the other manages the compliance rules around who is allowed to hold and use it.

In practice, CHFD is designed so that ordinary transfers can take place only between holders registered by authorised financial institutions.

Authorised financial institutions are recorded in the CHFD system as “Virtual Asset Service Providers”, or “VASPs”.

Each holder can also have a defined holding limit and their institutions must be in good standing. Every ordinary transfer is checked against these rules automatically: the sender and the recipient must both be eligible, and the transfer must stay within the applicable limit.

If the requirements are not met, the transaction is rejected. Specific functions, such as freezing or redeeming funds when required by law, are subject to separate permissions and procedures.

The system also separates different types of authority through defined administrative roles. Only those with the relevant permissions can:

• issue or redeem CHFD;
• manage holders and institutions/VASPs;
• enforce restrictions and update the smart contracts.

ChainSecurity reviewed these controls at the smart contract level, including how authorised actions are signed and protected against misuse, and how changes to the system itself are governed. Two areas were central to the assessment:

• Flow of funds: that there is proper control over who can hold and transfer CHFD.
• Minting and burning: that there is proper control over how CHFD can be issued or redeemed.

What is a smart contract audit?

An independent code review provides an additional layer of assurance for a system that is intended to be used by financial institutions. ChainSecurity is a Swiss smart contract security firm and ETH Zurich spin-off with experience working with both blockchain projects and regulated financial institutions.

For example, Circle names ChainSecurity among the security auditing firms it works with to review USDC smart contracts before launches and upgrades, which helps Circle meet its regulatory MiCA obligations.

For CHFD, the same approach is applied to the smart contracts behind a Swiss franc stablecoin. The audit provides an independent assessment of the smart contract and its security controls as the initiative moves into its testing phase.

Scope and limitations

Security audits are time-boxed and cannot uncover all vulnerabilities. They complement, but do not replace, the other measures required to secure a project. This audit covered the on-chain smart contracts; the supporting off-chain systems were outside its scope.