Swiss authorities consider launch of sandbox for blockchain applications

Maria Nikolova

The proposal about the sandbox is a part of a wider consultation concerning blokchain and initial coin offerings.

The Blockchain/ICO Working Group, established by the State Secretariat for International Financial Matters (SIF), with the involvement of the Federal Office of Justice (FOJ) and the Swiss Financial Market Supervisory Authority (FINMA), is mulling whether a separate sandbox should be established for blockchain-related projects. The proposal is a part of a wider consultation concerning blockchain-based technologies and initial coin offerings (ICOs).

Let’s recall that the working group was established at the start of 2018 to review the legal framework for such technologies and to determine whether there is any need for action. The working group is now inviting the sector to comment on the work carried out up until now and to respond to proposals.

Over the past months, the working group has dealt intensively with civil and financial market law and has examined whether and to what extent amendments to the current legislative instruments are appropriate due to the development of blockchain technology. The focus here is not only on so-called initial coin offerings but on all applications of distributed ledger technology in the financial sector. In particular, the group has identified a need for action in the civil law for transfer of tokens, their treatment under insolvency law and the creation of new opportunities in the area of financial market infrastructures.

The working group is directly inviting financial and fintech associations to participate in the consultation. However, concerns may be submitted by all interested parties to [email protected] by September 20, 2018. The working group will report to the Federal Council by the end of 2018, taking due account of the results of the consultation.

One of the proposals concerns the establishment of a sandbox for blockchain-based applications. There is a sandbox for fintech projects in Switzerland already but it is used for projects in the area of banking. The working group enquiries whether such a separate sandbox (or even separate sandboxes) would be able to solve certain regulatory hardships for companies engaged in the development of products based on blockchain.

In a recent fact sheet on virtual currencies, the Swiss Financial Market Supervisory Authority (FINMA) noted that virtual currencies like Bitcoin are not the only application of blockchain technology, which also underpins the services provided by so-called “colored coins” and “smart contracts”. In these cases the provider must ascertain in advance whether approval is required under other financial market laws (e.g. the Stock Exchange Act or the Financial Market Infrastructure Act).

At present, Switzerland has no regulations regarding the buying and selling of virtual currency units or their use as a means of paying for goods and services. Put otherwise, no special approval is required for these activities. This applies to everyone who pays with a virtual currency or buys units of it as well as to all those who accept payments in a virtual currency or sell units of it. This does not mean, however, that there are no risks in using or investing in virtual currencies given that they are subject to significant price fluctuation and there may be uncertainties regarding the currency issuer. Currently, it remains unclear whether claims to virtual currencies can be asserted under civil law.

In July this year, FINMA said it had commenced enforcement proceedings against envion AG. FINMA explained it possessed evidence that the company may have violated financial market law in relation to an initial coin offering (ICO).

The proceedings focus on possible breaches of banking law resulting from what is suspected to be unauthorised acceptance of public deposits in connection with the ICO for the EVN token. Investigations carried out by FINMA to date indicate that, in the context of its ICO, envion AG accepted funds amounting to approximately one hundred million francs from more than 30,000 investors in return for issuing EVN tokens in a bond-like form.

Read this next

Institutional FX

Appital launches liquidity creation functionality for buyside

“In today’s fragmented market, the likelihood of having natural market contras at size, in multiple days ADV, which also match price ambitions, is incredibly unlikely. What’s more, matching technology alone is no longer enough.”

Crypto Insider

Shiba Inu Secures $12 Million Investment to Advance its Blockchain Technology and Expand Global Ecosystem

Shiba Inu, an expansive digital assets ecosystem constructed on the Ethereum blockchain, featuring the globally recognized cryptocurrency $SHIB, today proudly announced securing a $12 million investment.

Retail FX

99.81% of NAGA shareholders approve merger with CAPEX.com

“Securing this vote will allow us, after the regulatory approvals for the merger, to execute the new business plan. We are expanding the global reach of NAGA and upgrading the SuperApp to offer a true all-in-one user experience, unique in the world of Fintech.”

Market News

Chinese Insurance Giant Leads Market in Face of US Tech Slump

Chinese insurer China Pacific Insurance has emerged as a standout performer amidst the recent flurry of activity in the Asia Pacific markets, capturing the attention of investors and traders alike.

Retail FX

Public strikes deal to acquire Stocktwits

“After launching bonds, a high-yield cash account, and options trading, Public’s platform has earned the right to be the primary brokerage platform for many investors, and we look forward to offering the full breadth of our platform to Stocktwits customers.”

blockdag

BlockDAG’s Impressive 30,000x ROI Potential and Moon-Based Keynote Captivate Solana And Bitcoin Cash Crypto Investors

Discover BlockDAG’s impressive moon keynote launch and its promise of a 30,000x ROI that is drawing investors from Solana and Bitcoin Cash.

Market News

This is it, the USD Strength has Come to an End

In the aftermath of Israel’s retaliatory strikes in Iran, the currency markets have entered a phase of heightened volatility, reflecting the intricate interplay between geopolitical tensions and economic fundamentals.

blockdag

BlockDAG Leads DeFi Innovation with $19M Presale, Overshadowing Cardano and Binance Coin With 30,000x ROI and DAG Structure

Learn about BlockDAG’s growth in its presale, surpassing $19M, and its impact on the DeFi landscape, overshadowing movements in Cardano and Binance Coin (BNB).

blockdag

BlockDAG Offering a Fresh Take on Meme Coin Development Amid Solana’s Challenges and Floki Inu’s Price Fluctuations With 30,000x ROI

Dive into how BlockDAG’s innovative presale, low-code platforms, and potential 30,000x ROI, outperform Solana’s technical hurdles and Floki Inu’s market predictions.

<