Swiss Federal Council continues to monitor developments around blockchain/DLT
Switzerland is generally open to innovative approaches in the financial market.
During its meeting held earlier today, the Swiss Federal Council was informed about the current opportunities and challenges associated with stablecoins.
Switzerland is generally open to innovative approaches in the financial market but will continue to actively monitor discussions on new digital technologies such as blockchain/DLT.
The comment mentioned the Libra cryptocurrency project, which is to be overseen by the Geneva-based Libra Association. As a stablecoin backed by a basket of currencies, Libra’s volatility should be limited, the Federal Council noted.
In September, the Swiss Financial Market Supervisory Authority (FINMA) confirmed that the Libra Association had requested an assessment of how the supervisory authority would classify the planned Libra project including the issuance of a ‘stable coin’ under Swiss supervisory law.
FINMA explained back then that in Switzerland, such a project would fall under financial market infrastructure regulation. The project as it is presently envisaged would require a payment system licence from FINMA, on the basis of the Financial Market Infrastructure Act (FMIA). Regulatory requirements for payment systems in Switzerland are based on the prevailing international standards, particularly the Principles for Financial Market Infrastructures (PFMI). These requirements also apply to the management of cyber risks. Also, a Swiss payment system is automatically subject to the Anti-Money Laundering Act.
The Federal Council says it is keeping a very close eye on global stablecoin projects and their associated opportunities and risks. There are reservations in the areas of financial stability, the fight against money laundering and terrorist financing, monetary and currency policy, and data protection. The Federal Council is committed to ensuring that the currency and stability policy challenges, in particular, are addressed through international cooperation between governments, central banks and supervisory authorities, with private providers also included.
Switzerland is open to discussions on internationally viable standards in connection with the use of new technologies. The upcoming annual meetings of the Bretton Woods institutions and the meeting of G20 finance ministers and central bank governors are seen as an ideal platform for these discussions.