- J McGlynn and M Bacina
Swift Swiss laws bring blockchain benefits and regulatory certainty
A new set of Swiss laws on blockchain and distributed ledger technology was recently announced (DLT Laws) and approved by the Swiss Parliament.
The main topics of the new DLT Laws are:
Establishing the possibility of an electronic registration of rights (stored on a blockchain), with features of negotiable securities (a particular kind of security defined under Swiss law);
Specific regulation of the segregation of crypto-based assets in the event of bankruptcy; and
The creation of a new authorisation category for "DLT trading facilities" (i.e. digital currency exchanges).
Rather than introduce a new specific piece of blockchain legislation, the DLT Laws amend ten other legal statutes to address the above topics - ranging from company bankruptcy to securities trading, and beyond.
The aims of the amendments are straightforward: to increase legal certainty and reduce barriers to the application of blockchain technology and reduce risks of misuse of the technology.
Tell me crystal ball, what does this mean?
Switzerland embraces digital currency culture
Switzerland has always been a major player in the world of banking and finance.
Unsurprisingly it was quick on the uptake of blockchain and cryptocurrency, with the Swiss government pushing innovation since the earlier days of Bitcoin. Both public and private sector companies in Switzerland are fond of experimenting with the technology. Private cryptocurrency banks, like Sygnum and Seba Crypto AG, have been growing since 2019.
The problem as State Secretary at the Swiss finance ministry, Jorg Gasser, puts it, lies in the lack of clear regulation around the technology:
We think there is huge potential - but the market is not discipline as we want. We want it to prosper without compromising standard or the integrity of our financial markets.
Mr Martin Eckert, partner at MEE, a Swiss law firm said:
They want Switzerland to be the place that makes it happen but they don’t want to be seen as the ‘wild west’.
Needless to say, the country already houses more than 900 blockchain and cryptocurrency companies, including Facebook’s Libra, with around 4,700 blockchain specialists enjoying Swiss chocolate and clocks (we assume) alonside cryptography and blocks. Removing regulatory uncertainty around blockchain technologies is essential if Switzerland is to continue being a leading hub in blockchain technology.
For more information on the specific amendments being introduced click here. We are hopeful that Australia might learn from this Swiss approach, and consider how our country can be made more blockchain friendly to keep jobs on shore and encourage innovation Down Under.