Switzerland's regulators should tweak current statutes rather than draft new ones to accommodate the blockchain sector, the Swiss government said. A report released by the Federal Council on December
Switzerland's regulators should tweak current statutes rather than draft new ones to accommodate the blockchain sector, the Swiss government said. A report released by the Federal Council on December 14 outlined how existing laws function for blockchain technology and blockchain in finance, though some modifications are needed.
The Federal Council wants to harness digitalization and blockchain technology to drive innovation and efficiency gains in the financial sector and beyond. They aim to build "the best possible framework conditions so that Switzerland can establish itself and evolve as a leading, innovative and sustainable location for fintech and blockchain companies."
That goal comes with an obligation to police misconduct and protect Switzerland's standing as a reliable financial hub. The approach the Federal Council is taking combines two principles: technological neutrality and reliance on principle-based rules rather than prescriptive ones.
The proposals include an amendment to securities law that would allow "the legally secure transfer of uncertificated securities by means of entries in decentralized registers." The wording would stay as technology-neutral as feasible. Financial market infrastructure law needs updating too. The Federal Council wants to establish a new authorization category for providers operating in blockchain and DLT. Changes to the Financial Market Infrastructure Act and the incoming Financial Institutions Act should "create more flexibility in order to better meet the requirements of blockchain/DLT applications," officials said.
The Federal Department of Finance and the Federal Department of Justice and Police will prepare a consultation draft in the first quarter of 2019 based on these proposals.
Mattia Rattaggi, who chairs the policy and regulatory working group at the Crypto Valley Association, 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." He continued: "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."
Angel Versetti runs Ambrosus, a platform combining blockchain technology with Internet-of-Things capability for supply chains in food and pharmaceuticals. He warned against stifling innovation and decentralization through excessive regulation and bureaucratic procedures, "because this will reduce the democratic value proposition that blockchain offers." Versetti suggested Switzerland focus regulation only on companies that serve retail customers, leaving decentralized protocols to function as a shared resource.
