Cryptoassets in Switzerland
Blockchain is flourishing in Switzerland because of an exemplary regulatory framework, a determined decentralised mindset, and an all-encompassing favorable business environment.
The Swiss federal government is working to create a friendly digital economy. In effect, Swiss crypto banks such as SEBA, Sygnum, and service providers like Bitcoin Suisse have reported an increase in institutional demand as local governments are using cryptocurrencies.
In 2018, the Swiss Financial Market Supervisory Authority (FINMA) issued guidelines for initial coin offerings (‘ICOs’), which clarified the regulatory requirements for such offerings.
The ICOs guidelines outlined three categories of tokens: payment tokens, utility tokens, and asset tokens. Payment tokens are considered to be equivalent to traditional means of payment, utility tokens grant access to a service or a product, and asset tokens represent assets such as debt or equity.
In 2020, the Swiss Parliament adopted the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (‘DLT bill’) and the Debt Enforcement and Bankruptcy Act entered into force in 2021.
The DLT bill provides a regulatory framework for digital asset custody, the issuance of DLT securities as well as their trading without necessarily requiring any additional license.
Furthermore, crypto assets may be held off-balance sheet, which reduces capital requirements so financial institutions and intermediaries are able to expand their services with a custody offering for crypto assets, creating new value-creation opportunities.
This is part of the country's goal to become a leading hub for digital assets and blockchain innovation.
The Swiss canton of Zug, also known as the "Crypto Valley" is home to a large number of blockchain and crypto-related companies. It has become a hub for the crypto industry in Europe thanks to its supportive government, favorable regulations, and educated workforce.
In 2016 Zug began accepting bitcoin for certain government services. Since then, the city has attracted many blockchain startups and companies, including Ethereum Foundation, Xapo, and Shapeshift.
The Crypto Valley Association, founded in 2013, has also played a significant role in promoting the development of the blockchain industry in Zug and Switzerland as a whole.
The association aims to create a supportive ecosystem for blockchain and crypto-related businesses by connecting them with investors, talent, and educational resources.
In addition, the region has a number of research institutions and universities, such as the University of Zurich, which have been conducting research in blockchain and thus providing a pool of talent for the industry.
Lugano, a city in the canton of Ticino, is a growing financial center in the crypto scene and is emerging as a hub for the crypto industry in Switzerland and Europe thanks to its favorable regulations, educated workforce, and proximity to the large Italian market.
Lugano’s Plan ₿, a joint initiative between the City of Lugano and Tether to accelerate the use of and leverage bitcoin technology aims to transform the city’s financial infrastructure.
The objective is to scale blockchain and Bitcoin throughout the city to positively impact all facets of daily life for the residents of Lugano. From small transactions with local merchants to larger efforts, such as paying annual taxes.
Lugano has attracted several crypto businesses and exchanges, including Bittrex and Bitfinex and houses the headquarters of several blockchain startups and projects to consolidate itself as a financial center and business location.
The Swiss framework is opening new business models possibilities for financial institutions and intermediaries through a crypto-friendly environment with legal clarity on the custody and segregation of crypto assets.
