With blockchain and cryptocurrency gaining more traction day after day, the Swiss government is now exploring the possibility of introducing legal amendments to current legislative instruments to facilitate the development of blockchain technology.
The blockchain/initial coin offering (ICO) working group was appointed at the start of 2018 to review the legal framework and point out any need for action. A consultation period was held during the month of September that invited financial and fintech associations to express their concerns, providing the industry an opportunity for the financial sector as a whole and all interested parties to comment on the potential for action.
The working group is responsible for examined whether and to what extent amendments are appropriate. The focus here is not only on ICOs but on all applications of distributed ledger technology (DLT) in the financial sector. It is set to report to the Federal Council by the end of 2018, which will then decide on the introduction of any legal amendments based on the findings.
Switzerland currently has no regulations regarding the buying and selling of cryptocurrencies or their use as a means of paying for goods and services.
The Swiss Financial Market Supervisory Authority (FINMA) has however published ICO Guidelines which define the information FINMA requires to deal with ICO enquiries and the principles upon which it will base its responses.
Swiss Fintech Innovations releases statement on blockchain regulation
Last month, Swiss Fintech Innovations (SFTI), an independent association of Swiss financial institutions, released its statement regarding the consultation on the work of the blockchain/ICO working group from the Federal Department of Finance on regulation.
The organization argues that today’s regulation does not meet the requirements of the digital world everywhere.
“The digital world is characterized by the fact that it is constantly evolving, thus very dynamic, that this development takes place in a strongly international network and, moreover, that numerous essential technical possibilities such as ‘tokens’ are initially perceived as ‘phenomena’ rather than can be clearly integrated into the existing legal system due to a lack of clear legal qualifications,” the SFTI says.
The organization advises for regulations only where necessary and appropriate (e.g. to create legal certainty, integrated into existing regulation without contradiction, etc.). These should be principle-based and technology-neutral, competition-neutral, focus on the preservation of a uniform or coherent legal system, and legislative processes should involve the consistent and early involvement of business and supervisory authorities.
It also remains that new technological possibilities do not necessarily require new regulation. “The decision as to whether regulation is necessary at all only emerges from [a comprehensive analysis from an economic, technical and legal point of view],” it says.
Switzerland collaborates with Israel
The topic of blockchain and ICO regulation has been a key area of focus for Swiss regulators. In September, Swiss officials visited Israel to gain bank access to Israeli markets, and discuss financial cooperation, including on the topic of blockchain technology.
Joerg Gasser, head of Switzerland’s state secretariat for international financial matters, and finance minister Ueli Maurer made the trip and opened a dialogue on how best to regulate ICOs and the wider blockchain and cryptocurrency spaces.
Both countries agreed to exchange notes on regulating blockchain technology. Gasser said he was preparing a report on how to regulate blockchain and would submit recommendations by the end of the year, aiming for approval by parliament in 2019 so they could go into effect by early 2020.
Switzerland has long been at the forefront of blockchain innovation, welcoming foreign startups and entrepreneurs with open arms. Zug, a municipality and small town located just outside of Zurich in Switzerland, has earned itself a reputation for being known as Crypto Valley due to its establishment of a global hub for blockchain and crypto startups.
In September, regulated bank Dukascopy announced that it will be utilizing Ethereum’s public blockchain for an ICO currently pending regulatory approval from FINMA. The Swiss online bank says they will issue 20 billion Dukascoins to fund the expansion of its mobile banking operations.
Furthermore Swissquote now offers also their infrastructure to ICOs.
Featured image: Bitcoin, Cryptocurrency, via Pixabay.
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