The Swiss government has advised regulators not to create new legislations but instead make adjustments to existing laws to accommodate companies in the blockchain and cryptocurrency space. The amendments should focus on enhancing Switzerland’s position as a blockchain-friendly country, the Swiss Federal Council said last week.
On 14 December, the Swiss Federal Council published its report “Legal basis for distributed ledger technology and blockchain in Switzerland”. The report deals with the future regulation of Bitcoin and the underlying technology.
The technology, which lies under crypto currencies such as Bitcoin and Ethereum, holds great potential for the financial sector, as the Federal Council acknowledges in its report. That is what the report says:
“Distributed Ledger Technology (DLT) and blockchain technologies are among the remarkable and potentially promising developments in digitization. These developments in the financial sector as well as in other sectors of the economy are predicted to have considerable, albeit not yet conclusive, potential for innovation and increased efficiency. Today, Switzerland is one of the leading locations in the DLT and blockchain sectors. In the financial sector in particular, a growing FinTech and Blockchain ecosystem has developed in Switzerland in recent years”.
In order to create the best conditions for this, the company does not want to enact its own Blockchain law. However, the government is planning to react flexibly to technical innovations if necessary. In addition, the Federal Council of Switzerland considers some adjustments to be sensible.
In the future, more attention will also be paid to money laundering and the financing of terrorism. However, the Federal Council of Switzerland recognises that it is not possible to accurately assess the actual need for trade here:
“The risk analysis prepared by the Interdepartmental Coordination Group on Combating Money Laundering and Terrorist Financing (CFT) in 2018 shows that there is a risk of misuse of crypto-based assets for money laundering and terrorist financing due to the identified threat and vulnerability in Switzerland. However, the risk and vulnerability identified affects all countries. The risk analysis also shows, however, that in Switzerland the real risk cannot be determined exactly due to the small number of cases.”
Industry participants welcomed the Federal Council’s new blockchain strategy. Dr Mattia Rattaggi, chair of the policy and regulatory working group at the Crypto Valley Association (CVA), said the report is “entirely in tune with its goal to create the best possible framework conditions for ‘Crypto Nation Switzerland,’ while underlining the country’s integrity and reputation as a financial center and business location.”
“We feel that this approach best represents the principle of technological neutrality and is in line with the position taken by the CVA in the consultation process. Crucially, this approach ensures maximum consistency within the current legal framework while keeping it principle-based and flexible, while allowing changes to be adopted on a ‘need-to-regulate’ basis.”