- Federal Council wants to further improve framework conditions for blockchain/DLT
During its meeting on 7 December 2018, the Federal Council adopted a report on the legal framework for blockchain and distributed ledger technology (DLT) in the financial sector. The report shows that Switzerland’s legal framework is well suited to dealing with new technologies, including blockchain. Nevertheless, there is still a need for selective adjustments. The Federal Council also noted the analysis of an interdepartmental working group on the money laundering and terrorist financing risks posed by crypto assets.
The Federal Council acknowledged that distributed ledger technology and blockchain technology have considerable potential for innovation and enhanced efficiency both in the financial sector and in other sectors of the economy and thus, the opportunities offered by digitalisation for Switzerland shall be explored. The Federal Council confirmed that it wants to create 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. Moreover, it wants to consistently combat abuses and ensure the integrity and good reputation of Switzerland as a financial centre and business location.
- The Report
As the Federal Council stated, the report provides an analysis of relevant framework conditions, clarifies the need for action and proposes concrete measures. It is based on the work of the blockchain/ICO working group, which was set up by the Federal Department of Finance (FDF) in January 2018 and which also consulted the fintech and financial sector as part of its work. The analyses show that there is no need for fundamental adjustments to the Swiss legal framework, but that there is still a need for specific adjustments. The Federal Council has instructed the FDF and the Federal Department of Justice and Police (FDJP) to draw up a consultation draft in the first quarter of 2019 in a bid to:
- in civil law, increase legal certainty for the transfer of rights by means of digital registers;
- in insolvency law, further clarify the segregation of crypto based assets in the event of bankruptcy and examine the segregation of data with no asset value,
- in financial market law, devise a new and flexible authorisation category for blockchain-based financial market infrastructures,
- in banking law, reconcile the bank insolvency law provisions with the adjustments in general insolvency law, and
- in anti-money laundering law, more explicitly anchor the current practice of making decentralised trading platforms subject to the Anti-Money Laundering Act.
- Combating money laundering and the financing of terrorism
The Federal Council also took note of a report by the interdepartmental coordinating group on combating money laundering and the financing of terrorism (CGMF) on the money laundering and terrorist financing risks posed by crypto assets and crowdfunding. The analysis shows that crypto based assets pose a threat in the area of money laundering and terrorist financing. Due to the small number of cases, however, the real risk in Switzerland cannot be estimated conclusively. Nevertheless, Switzerland has a comprehensive regulatory system in place, which is why further improvements need to be addressed with internationally coordinated measures. The Federal Council has also instructed the FDF to examine whether anti-money laundering law should be adapted with regard to certain forms of crowdfunding.