During its meeting on 22 March 2019, the Federal Council initiated the consultation on the adaptation of federal law to developments in distributed ledger technology (hereinafter referred to as “DLT”). This will limit risks of misuse , increase legal certainty and remove hurdles for DLT-based applications. The Federal Council’s draft serves to further improve the regulatory framework for DLT in Switzerland, in particular in the financial sector. The consultation will last until the end of June 2019. Previously, in December 2018, the Federal Council adopted a report on the legal framework for blockchain and DLT in the financial sector. It emphasised 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 DLT companies and, most importantly, it wants to consistently combat abuses and ensure the integrity and good reputation of Switzerland as a financial centre and business location (reference is made to https://www.irglobal.com/article/no-blockchain-law-required-for-switzerland).
Among other things, the report showed that Switzerland’s legal framework is already well suited today to dealing with new technologies, including DLT. However, it also pointed out the need for selective action. In the consultation draft which was announced in December 2018 and is now available, the Federal Council proposes the following adjustments in particular:
- in civil law, increase legal certainty for the transfer of rights by means of digital registers (the possibility of an electronic registration of rights that can guarantee the functions of negotiable securities is to be created);
- 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,
- in anti-money laundering law, more explicitly anchor the current practice of making decentralised trading platforms subject to the Anti-Money Laundering Act (these amendments at ordinance level are not part of this consultation draft, rather they are to be integrated into the planned amendment of the Anti-Money Laundering Ordinance as part of the ongoing revision of the Anti-Money Laundering Act).
The Federal Council has also asked for clarification as to whether legislation in the area of the prevention of money laundering and terrorist financing should be adapted with regard to crowd-donating and crowd-supporting platforms. At the moment, relatively modest donations are collected via these platforms. In addition, other jurisdictions are currently also refraining from regulating such activities. The Federal Council is therefore of the opinion that it would be disproportionate at present to subject crowd-donating and crowd-supporting platforms to the Anti-Money Laundering Act. It will continue to monitor developments and, if necessary, reassess whether such platforms should be subject to the Anti-Money Laundering Act.