T Skevington and M Bacina
Switzerland proposes new and improved regulatory framework for DLT
12 months after announcing a government-wide blockchain strategy, which has included ongoing consultation aiming to create a more certain legal foundation for DLT, the Federal Council of Switzerland has detailed its proposed updates to banking, corporate and financial infrastructure laws to accommodate DLT.
Rather than propose the introduction of new laws specific to blockchain, the proposal sensibly provides for specific amendments to nine federal acts, covering both civil law and financial market law. Parliament is slated to examine the proposal in detail in early 2020.
The proposals have largely been applauded by industry groups both domestically and internationally, with the Swiss Blockchain Federation stating that, if enacted, these proposals will mean that:
Switzerland will have the most advanced private legal framework for token-based business models in the world
The Swiss model also demonstrates the effectiveness of wide-ranging and open-ended consultation. Commenting to swissinfo.ch, Jacques Iffland, chairman of the Capital Markets and Technology Association, said that:
One of the key concerns with the earlier version was the treatment of digital assets in the case of bankruptcy of custodians... If implemented, the initial proposal would have seriously compromised the development of digital assets in Switzerland.
The regulatory environment has certainly attracted global attention, with the Libra Association choosing Switzerland as a base to establish operations.
While Swizterland hasn't shown as much aversion to blockchain application as some its neighbours, legislators have been frank about the challenges.
The Swiss blockchain strategy has acknowledged that the true potential of blockchain “cannot yet be conclusively estimated” as it has yet to be tested on a widespread scale.
Similarly, the initial government report talks frankly about the implications for anti-money laundering, counter-terrorism financing and monetary policy of the rise of digital currency.