The Swiss Government wants to regulate the blockchain sector within existing financial laws.
The Nations Federal Council published a report, giving a legal framework for blockchain, or distributed ledger technology (DLT), asserting that Switzerland’s current rules are well suited to deal with such new technologies; however, there is still a need for some amendments.
Initially, the council has suggested an amendment to the country’s securities law to expand the legal certainty of crypto tokens. “Since an entry in a decentralized register available to interested parties can generate publicity similar to the ownership of a security, it looks justified to attach similar legal effects to this entry,” the highest executive authority of the Swiss Confederation described.
The council further wants to separate crypto assets from the insolvent debtor’s total estate in bankruptcy proceedings. Although, because the nation’s existing Debt Enforcement and Bankruptcy (DEBA) it isn’t clear whether these assets can be separated, the council stated there is a “great need for legal certainty” for the parties involved, and therefore a corresponding change is recommended in the DEBA act.
However, the government body has suggested the creation of a new ‘authorized category’ for infrastructure providers in the blockchain sector and accordingly will make changes to its Financial Market Infrastructure Act. Presently, the council has not yet introduced any specific changes as the central definitions of the terms “securities” and “derivatives” in financial market regulations are also relevant for blockchain-enabled business models, it stated.
Regarding the nation’s Anti-Money Laundering Act, the council stated the legislation is currently enough to cover activities related to Initial Coin Offering (ICOs) and digital currencies. “The general principles of the Anti-Money Laundering Act also apply to crypto-based assets.” it stated, adding that there is no need for a “fundamental revision” at present.
The government of Switzerland has been working on blockchain regulation since 2016 when the nation’s Federal Department of Finance outlines its plans to regulate fintech. Later in early 2017, the council itself was looking for consultations on regulatory changes for the domestic financial industry to account for fintech including blockchain.
Recently, Switzerland’s Financial Market Supervisory Authority (FINMA) launched a new fintech license with “relaxed” requirements that are applicable to digital currency and blockchain-based firms.