Swiss Federal Council Votes to Adapt Current Financial Regulations to Include Cryptocurrencies

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Swiss Federal Council Votes to Adapt Current Financial Regulations to Include Cryptocurrencies

25th March 2019 banking banking industry business intelligence compliance cryptocurrencies 0

Swiss lawmakers have recently voted to include cryptocurrencies in an adapted form of the country’s existing financial regulations. The vote was introduced by lawmakers who are concerned about the illicit use of anonymous cryptocurrencies, which could change the regulatory landscape for digital assets in Switzerland’s ‘crypto valley’.


Switzerland’s Recent Vote on Crypto Regulation Explained

The Swiss Federal Council officially voted 99-83 (with 10 abstentions) to adapt its current financial regulations to cover cryptocurrencies.

The vote proposed that existing “procedural instruments of the judicial and administrative authorities” should be adjusted “so that they can also be applied to cryptocurrencies”.

The motion was first introduced by Swiss Free Democrat Giovanni Merlini (FDP / TI).

Merlini has reportedly argued for modified legislation to minimize the nefarious use of cryptocurrencies. He has publicly stated that anyone can establish a cryptocurrency with anonymous users, which can then be used to support criminal activities.

With anonymous features, says Merlini, cryptocurrency becomes the favored instrument used in extortions and money laundering.

Merlini’s proposed resolution also called for further clarification regarding the regulation of cryptocurrency trading platforms. Whether or not such platforms will be regulated in the same manner as “other financial intermediaries” is entirely unclear at this point.

The Potential Change to Switzerland’s ‘Crypto Valley’

Switzerland has a well-known reputation of being a crypto-friendly jurisdiction. This is especially the case in the town of Zug— frequently referred to as the ‘Crypto Valley’— where numerous crypto companies and various ‘foundations’ are domiciled.

However, several controversies have recently emerged with crypto ventures who are either based in, or have ties to, Switzerland.

Tezos, which has offices in Zug, has seen numerous lawsuits from investors.

Envion, an eco-friendly mining project based partly in Switzerland, failed to produce a project after a judge dissolved the company. The ruling came after nearly $100 million USD was raised from more than 30,000 investors through an Initial Coin Offering (ICO).

The concern for the illicit use of anonymous cryptocurrencies is not solely in Switzerland, however.

Lawmakers in France have recently called for mandatory identification requirements concerning the users of digital assets.

Similar requirements could reach the United States as well, where Securities and Exchange Commission (SEC) Chairman Jay Clayton has repeatedly stated that virtually all ICOs he has seen— minus Ethereum— constitute securities.

They therefore must abide by the commission’s existing securities laws.

The resulting situation has been the emergence of security tokens, a digital asset which explicitly declares a securities status. Security tokens transparently abide by their respective laws, all the while utilizing distributed ledger technology.

Many believe they will bring unprecedented levels of liquidity to financial securities— a traditionally illiquid asset class with a total global value of more than $500 trillion.

What do you think about the Swiss Federal Council’s recent vote? What does the future of digital asset regulation in Switzerland look like? We’d like to know what you think in the comments section below.


Image courtesy of My Switzerland.

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