The Government of Switzerland has announced a new legislative approach to blockchain and crypto regulation, aiming to facilitate activities in this sphere. The official report recognizes technology as one of the most important recent developments for the financial sector in boosting the country's economy.
A Swiss innovation paradise
According to the report, the main focus of the Swiss Federal Council is "to ensure Switzerland's integrity and reputation as a financial center." They aim to better position the country in order to "exploit the opportunities offered by digitization."
The government's plan is to create the best legal conditions so that the country can continue to evolve as a major and sustainable destination for fintech, blockchain and innovative firms in these areas.
Although the report discusses the risk of using crypto for illegal purposes, such as terrorist financing, it maintains a positive attitude towards technology. It is noted that country laws should be modified to recognize encrypted digital tokens that are not supported by any physical assets. The Federal Council also stated that it wants decentralized financial transactions to be integrated into the legal code.
Non-restrictive regulations
The Federal Council's report proposes that the Swiss Financial Market Supervisory Authority (FINMA) should have discretionary powers to regulate the crypto industry. FINMA will thus be able to relax the regulations affecting the decentralized securities trading platforms, as long as their activities do not harm investors. This regulatory approach allows circumvention of current legislation. Switzerland has passed a series of laws imposed by the European Union in this area.
Swiss economist Luzius Meisser has expressed his conviction that this approach to legislation can be more effective:
"This once again shows that Switzerland's traditional approach to having laws based on principles that give great discretion to citizens and regulatory agencies are much more innovative than overly detailed European-style laws."
Switzerland has decided to achieve these goals without creating a series of new laws, opting instead to adapt current legislation to new technological developments.
Mattia Rattaggi, spokesperson for the Crypto Valley Association (CVA), commented on the association's position on this ad:
"We believe that this approach is best suited to the principle of technological neutrality and is in line with the position of the CVA in the consultation process ... This approach ensures maximum consistency in the current legal framework by ensuring principles and flexibility while allowing changes to be made based on a "regulatory need".
Proposed changes
The report of the Federal Council of Switzerland describes some changes to the laws that will apply to the blockchain and cripto industry. At the same time, it clarifies that there is no intention to immediately change the financial or insurance laws because they believe that blockchain technology is still "in the early stages" when it comes to these sectors.
The most important legislative amendments proposed so far include:
- Modifying the Collective Investment Scheme Act to include a new type of "Limited Qualified Investment Funds" with the intention of launching future innovative products as quickly and efficiently as possible.
- Data will be recognized as assets by amending the bankruptcy laws of the company. This would allow the Swiss courts to properly manage and distribute their digital assets when solving legal disputes.
- Extend the Anti-Money Laundering Act to include decentralized exchanges and allow law enforcement authorities to liquidate digital assets issued by third parties.
- Creation of new authorization categories to give FINMA the opportunity to relax regulations for traders and decentralized stock exchanges based in Switzerland.
- Amend Law on Financial Institutions and Financial Market Infrastructure Law to make them more flexible to blockchain initiatives.