The Federal Council of Switzerland is consulting on the adaptation of federal law to the developments in distributed ledger technology (DLT). It thereby wants to increase legal certainty, remove hurdles for DLT-based applications, and limit risks of misuse. The draft serves to further improve the regulatory framework for DLT in Switzerland, particularly in the financial sector. The consultation will end on June 28, 2019.
The Federal Council, in December 2018, had adopted a report on the legal framework for blockchain and DLT in the financial sector. The Federal Council emphasized 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. Moreover, it wants to consistently combat abuses and ensure the integrity and good reputation of Switzerland as a financial center and business location. Among other things, the report showed that Switzerland's legal framework is already well-suited to dealing with new technologies, including DLT. However, it also pointed out the need for selective action. In the consultation draft, the Federal Council proposes the following adjustments:
- In the Swiss Code of Obligations, the possibility of an electronic registration of rights that can guarantee the functions of negotiable securities is to be created. This is intended to increase legal certainty in the transfer of DLT-based assets.
- In the Federal Law on Debt Collection and Bankruptcy, the segregation of crypto-based assets in the event of bankruptcy is to be expressly regulated, also to increase legal certainty.
- In financial market infrastructure law, a new authorization category for so-called "DLT trading facilities" is to be created. These are intended to be able to offer regulated financial market players and private customers services in the areas of trading, clearing, settlement and custody with DLT-based assets.
- Finally, it should also be possible in future to obtain a license to operate an organized trading facility as a securities firm. This requires an adaptation of the future Financial Institutions Act.
Comment Due Date: June 28, 2019
Keywords: Europe, Switzerland, Banking, Fintech, Distributed Ledger Technology, Blockchain, Swiss Federal Council
Previous ArticleIMF Publishes Reports on 2019 Article IV Consultation with Bulgaria
HKMA announced the publication of a report on fintech adoption and innovation in the banking industry in Hong Kong.
BIS published a working paper that examines the drivers of cyber risk, especially in context of the cloud services.
ECB launched consultation on a guide specifying how the Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy.
ECB published an opinion (CON/2020/16) on amendments to the prudential framework in EU in response to the COVID-19 pandemic.
EBA published a report that examines the interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD).
SRB published the final Minimum Requirements for Own Funds and Eligible Liabilities (MREL) policy under the Banking Package.
US Agencies (FDIC, FED, and OCC) published a final rule that makes technical changes to the March 31, 2020 interim final rule that provides a five-year transition period for the impact of the current expected credit loss (CECL) methodology on regulatory capital.
ECB published results of the March 2020 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets.
FINMA published guidance (06/2020) on extending or discontinuing various exemptions that were granted due to the COVID-19 crisis.
SRB launched a consultation on the minimum data needed for valuation of a bank in resolution.