The Swiss Government believes that its existing financial laws are compatible to deal with new technologies like the 21st century’s most talked about distributed ledger technology (DLT) – the blockchain. And that is why the country’s Federal Council recently issued a report that outlines a legal framework for distributed ledger technology (DLT) to be included in the current financial system.
In the report, the council has proposed an amendment to the country’s securities law in order to ensure the legal certainty of crypto tokens. The Swiss Confederation’s highest executive authority explains: “Since an entry in a decentralised 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.”
The council is also looking to segregated crypto assets from the insolvent debtors’ total estate in bankruptcy proceedings. It is still not known whether such assets can be separated under the current Debt Enforcement and Bankruptcy Act (DEBA), but the Council says that there is a “great need for legal certainty” for the parties involved and therefore a corresponding change is proposed in the DEBA act.
The Council has also proposed the creation of a new “authorisation category” for infrastructure providers in the blockchain industry, and will consequently make amendments to its Financial Market Infrastructure Act. The government body has not yet proposed any specific changes at the moment, as the central definitions of the terms “securities” and “derivatives” in financial market regulations are also relevant for blockchain-based business models.
The Council also said that the Swiss legislation is satisfactory about its Anti-Money Laundering Act, to cover activities related to cryptocurrencies and initial coin offerings (ICOs). It also said that the general principles of the Anti-Money Laundering Act also apply to crypto-based assets and there is no need for a “fundamental revision” now.
Additionally, Switzerland’s Financial Market Supervisory Authority (FINMA) recently introduced a new fintech license with “relaxed” requirements that are applicable to blockchain and cryptocurrency-based firms.
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