The government of Switzerland, the Federal Council, sees the need to accommodate the blockchain sector by making regulations which are designed within its existing financial laws.
The government has adopted a report based on the analysis conducted by a blockchain working group. The report provides a legal framework for distributed ledger technology (DLT) or blockchain. It concludes that Switzerland’s existing financial rules are well suited to dealing with such new technologies, with only a few selective changes.
The report states, “The Federal Council currently sees no fundamental issues regarding financial market law that specifically concern blockchain/DLT-based applications and would require fundamental adjustments. Swiss financial market law is generally technology-neutral and able to deal with new technologies.”
One of the domains in which it requires amendments is the country’s securities law. The improvement in the securities law will increase the legal certainty of crypto tokens. On this, the highest executive authority of the Swiss Confederation elaborated, “Since an entry in a decentralized register accessible to interested parties can create publicity similar to the ownership of a security, it seems justified to attach similar legal effects to this entry.”
Apart from that, targeted adjustments are required in areas like banking law, civil law, insolvency law, and anti-money laundering law. Regarding the civil law, the Federal Council has advised that the legal certainty involving the transfer of rights via digital registers be increased.
Moreover, the governing body at Switzerland also recommends changes in insolvency law, indicating the necessity for the clarifications regarding the segregation of cryptocurrency from the bankrupt’s estate.
With that, the Federal Council also proposes the formation of a new “authorization category” for infrastructure service providers in the blockchain field. Also, it will modify the Financial Market Infrastructure Act accordingly. The council also explained regarding the country’s Anti-Money Laundering Act, stating, “The general principles of the Anti-Money Laundering Act also apply to crypto-based assets.” It added that there is no need for a “fundamental revision”, currently.
Lastly, the council affirms in the report that it is aiming to “create the best possible framework conditions so that Switzerland can establish itself and evolve as a leading, innovative and sustainable location for fintech and blockchain companies.”