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Distributed Ledger Technology (DLT) License: Switzerland

Nov 12, 2020
DLT License Switzerland

On 25 September 2020, the Swiss Parliament approved new regulations on Distributed Ledger Technology (DLT) and blockchain, amending the Swiss legal framework in order to specifically recognize securities based on these innovative technologies [1]. Along with the government, the Swiss Financial Market Supervisory Authority (FINMA) has recognized the high potential of blockchain technology and DLT in the financial field and the economy in general.

Switzerland positions itself as a leader in the cryptocurrencies revolution in Europe by adopting advanced regulatory amendments in key areas such as civil, insolvency and financial market law, as well as anti-money laundering regulation. The country continues to make great strides towards becoming the center of Europe’s blockchain technology developments, thus encouraging broader adoption and paving the way for the digitization of the Swiss economy as a whole.

With the unanimous approval of the parliament for new DLT regulations, the country is now experiencing the best conceivable environment for blockchain implementation within financial markets through: 

(i) the creation of a new financial market infrastructure by introducing DLT trading facilities; and

(ii) the introduction of legal specifications for the creation, transfer and custody of DLT-based assets.

DLT-trading facilities introduce a new permission for trading venues, allowing entities to offer DLT-based asset trading, clearing, settlement and custody. Prior to the new legal framework, only banks, securities firms and other authorized financial institutions qualified as entities permitted to operate these venues in the form of organized trading facilities.

The creation of DLT trading facilities results in lower barriers to entry and increased competition within the financial markets by ensuring that smaller infrastructures operating based on DLT have the ability to become licensed. Qualified participants will not be limited only to regulated financial market players, but also other legal entities and private customers.

Uncertificated Register Securities, a new type of digital securities, are also introduced within the approved DLT framework. They provide a legal basis for the use of DLT or other technologies on the digitization or tokenization of assets such as shares, bonds and uncertificated financial instruments. Its main advancement resides on that the underlying rights from these instruments cannot be transferred without the token. These rights, in turn, must be registered on a ledger that limits the transfer and assertion of these rights only within said ledger. Further requirements for this register are to prevent manipulation and provide functional safety, as well as having its operating principles and governing agreement recorded within.

The approval of the new regulations on Distributed Ledger Technology places Switzerland at the forefront of all legislation related to crypto/digital assets and financial technology by responding to the challenges of blockchain technology. The chosen regulatory methodology enables Switzerland to acknowledge the flexibility required to keep up with technological advances. 

It is imperative to comprehend that when investing, the FINMA license is a guarantee of confidence as it is the best indicator of trust representation. Switzerland’s support for blockchain companies and cryptocurrencies has resulted in many firms from all over the world establishing their headquarters in the country, with clear evidence seen in the exponential growth of the Crypto Valley in Zug. 

Acquiring the license

At Scalable Solutions, a Swiss blockchain and digital asset services provider, we understand the opportunities for companies interested in the development, acquisition and investment in the digital asset space. 

Our team is prepared for the technological or regulatory challenges that your company may face by offering white-label platforms for the launch of professional digital asset exchanges. Scalable also offers blockchain infrastructure to tokenize any asset and get everything running quickly, in a secure and regulated environment. 

Our technology can sustain high-load demand from highly regulated institutions and comply with various regulatory frameworks. As a Technology provider, we can also help companies with the process of acquiring the DLT license with our network of top tier legal partners.

If you are looking to get your company established in Switzerland under the newly approved DLT legal framework, Scalable Solutions is the technology partner to help you achieve this, together with our legal partner Lorez Legal. Get in touch with us here

 

 

 

 

 

Reference

[1] “Bundesgesetz Zur Anpassung Des Bundesrechts an Entwicklungen Der Technik Verteilter Elektronischer Register.” 25 Sept. 2020, www.admin.ch/opc/de/federal-gazette/2020/7801.pdf. 

General Source

“Parlament Setzt Bessere Rahmenbedingungen Für Blockchain.” Parlament.ch, 10 Sept. 2020, www.parlament.ch/de/services/news/Seiten/2020/20200910092808664194158159041_bsd039.aspx. 

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