Swiss Federal Council launches consultation on framework conditions for blockchain/DLT

Maria Nikolova

The Federal Council wants to increase legal certainty, remove hurdles for DLT-based applications and limit risks of misuse.

Switzerland’s Federal Council today launched a consultation on the adaptation of federal law to developments in distributed ledger technology (DLT). 

The aim is to increase legal certainty, remove hurdles for DLT-based applications and limit risks of misuse. The draft serves to further improve the regulatory framework for DLT in Switzerland, in particular in the financial sector. The consultation will last until the end of June 2019.

In December 2018, the Federal Council adopted a report on the legal framework for blockchain and DLT in the financial sector. Among other things, the report showed that Switzerland’s legal framework is already well suited to dealing with new technologies, including DLT. However, it also highlighted the need for selective action. In the consultation draft, the Federal Council proposes the following adjustments:

  • In the Swiss Code of Obligations, the possibility of an electronic registration of rights that can guarantee the functions of negotiable securities is to be created. This seeks to beef up legal certainty in the transfer of DLT-based assets.
  • In the Federal Law on Debt Collection and Bankruptcy, the segregation of crypto-based assets in the event of bankruptcy is to be expressly regulated, also to increase legal certainty.
  • In financial market infrastructure law, a new authorisation category for so-called “DLT trading facilities” is to be created. These are intended to be able to offer regulated financial market players and private customers services in the areas of trading, clearing, settlement and custody with DLT-based assets.
  • Finally, it should also be possible in future to obtain a licence to operate an organised trading facility as a securities firm. This requires an adaptation of the future Financial Institutions Act.

In the area of combating money laundering, the Federal Council sees a need, as outlined in December 2018, for more precise definitions of current practices. However, these amendments at ordinance level are not part of this consultation draft, rather they are to be integrated into the planned amendment of the Anti-Money Laundering Ordinance as part of the ongoing revision of the Anti-Money Laundering Act.

The Federal Council has also asked for clarification as to whether legislation in the area of the prevention of money laundering and terrorist financing should be adapted with regard to crowddonating and crowdsupporting platforms. At present, relatively small donations are collected via these platforms. In addition, other jurisdictions are currently also refraining from regulating such activities.

That is why, the Federal Council considers that it would be disproportionate at present to subject crowddonating and crowdsupporting platforms to the Anti-Money Laundering Act. It will continue to monitor developments and, if necessary, reassess whether such platforms should be subject to the Anti-Money Laundering Act. 

Read this next

Inside View

Private Equity Renaissance

Recent years have seen a resurgence in the concept of trading physical equities, with a slew of new arrivals joining the market for what is arguably one of the oldest forms of investing. But what has been the driving force behind this change in momentum?

Digital Assets

Dubai introduces new crypto regulations with fines of up to $135,000

Against the backdrop of a crashing market and burned investors, Dubai has sealed a landmark rulebook that governs how the Emirate will regulate cryptocurrency activities.

Institutional FX

FX volume drops 16pct at Russia’s largest exchange in January

The Moscow Exchange, Russia’s largest exchange group, released its monthly batch of trading volumes and metrics for January 2023 – the latest readings showed a pullback across the board for multiple segments, namely in the FX, given lower volatility and a reduced trading schedule.

Institutional FX

Standard Chartered sets up wholly-owned brokerage arm in China

UK-headquartered bank Standard Chartered said its Hong Kong arm has been granted an in-principle approval for a brokerage license from the China Securities Regulatory Commission (CSRC).

Digital Assets

Revolut offers staking for Ether, Cardano, Polkadot, and Tezo

British fintech and banking firm Revolut has introduced crypto staking — a practice of earning rewards for serving as a transaction validator in the Ethereum blockchain – to its UK and European Economic Area (EEA) customers.

Inside View

Saxo releases Q1 2023 Quarterly Outlook: “The Models Are Broken”

“2023 is likely to prove a rough ride for currencies if the USD bear market fails to continue in a straight line, but EUR and JPY may outperform.”

Institutional FX

FXPA welcomes Mesirow as a member of the institutional FX industry body

“Our deep commitment to advancing best practices align well with FXPA’s goals of championing a robust FX market for all industry participants.”

Industry News

ICE delivers Russian-free barrels of ICE Gasoil and expands ESG data in APAC

ICE changed the methodology for Low Sulphur Gasoil futures from previously delivering diesel from any origin, to deliver diesel that does not include any originating from Russia. ICE Gasoil is the global benchmark for refined oil products.

Digital Assets

Gate.io taps Coinfirm for AML/CFT compliance amid licenses in the US, Europe, Hong Kong

“At Gate.io, we continuously strive to mitigate AML/CFT and counterparty risks by integrating best-in-class security measures and safeguards into every part of our operations.”

<