A remarkable ecosystem of innovative Fintech and Blockchain companies has developed in Switzerland in recent years, especially in the financial sector.
Switzerland has in a very short time built a worldwide reputation as a "Crypto Nation" by projecting it as a center for the cryptoactive and blockchain industry. The number of new companies had grown to around 600 at the end of September 2019.
It has quickly become one of the world's leading blockchain centers, attracting both new businesses and hundreds of millions of dollars in investments. The technology, which began as a means to replace existing financial infrastructure, is now being adopted and adapted by banks, stock exchanges and other industries.
The Swiss Blockchain Federation welcomed the proposals made by the Swiss government regarding legislation for cryptoactive and DLT transactions, stating that:
"Switzerland will have the most advanced private legal framework for token-based business models in the world"
True Intentions of Change
With the intention of accelerating the processes that allow the implementation of this legal framework as soon as possible, the Swiss Government adopted a pragmatic approach to the situation by deciding that a new separate blockchain law is not necessary, but prefers to amend the civil and financial law of the existing market. This reflects the objective of establishing the conditions for Switzerland to strengthen and extend its leadership position in the field of new financial models.
Federal Council Proposals
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It states that it is not necessary to change the anti-money laundering legislation at present, since existing rules may also apply to new business models. But an update is included that covers decentralized exchanges, with the power to dispose of third-party assets.
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The bankruptcy laws of companies will be modified to recognize "data" as an asset. This would allow the courts to manage purely digital assets and ensure that they go to the right creditor when they solve insolvent companies. This same condition applies to the Banking Law, in the case of a bankrupt financial institution.
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A "new category of authorization" will be created for operators and exchanges of blockchain securities in order to give The Swiss Financial Market Supervisory Authority (FINMA) the power to evaluate the activities of these entities. Modifying the Financial Market Infrastructure law and the Financial Institutions Law to "create more flexibility" for blockchain / DLT applications.
Conclusion
These unorthodox actions taken by the Swiss government in terms of legislation for the cryptoactive and blockchain financial industry, demonstrates once again how the traditional Swiss approach of having laws based on principles that grant much discretion to citizens and regulatory agencies, It is much more favorable to innovation than European-style laws that are too detailed and strict.
Switzerland has chosen the route of adapting the current legislation to incorporate the new technology. This approach was well received by the Crypto Valley Association (CVA), which considers a solid legal basis as an essential pillar of Switzerland's blockchain strategy.
If these laws were enacted this year 2020, they would allow new ways to create, store and carry out transactions of purely digital assets, allowing the development of DLT to have significant potential for innovation and efficiency gains in the financial sector, as well as in other sectors of the economy.
This could be evidenced when it is possible to create shares of a company only digitally without a paper copy, allowing instant settlement of operations.
The Swiss government is aware that this incorporation of new digital technology is of such a disruptive level that it requires changes in the law to protect consumers and at the same time allow new forms of transactions and businesses.
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