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The Federal Council, a seven-member cabinet making up the Swiss government, believes that the country’s legal framework needs some “selective adjustments” to better deal with emerging technologies, including blockchain.
During its meeting on December 7, the Federal Council adopted a report on the legal framework for blockchain and distributed ledger technology (DLT) in the financial sector.
The report, based on the work of the blockchain/ICO working group set up in January 2018, provides an analysis of relevant framework conditions, clarifies the need for action and proposes concrete measures.
According to the report, Switzerland's legal framework is well suited to dealing with innovative technologies and doesn’t need fundamental adjustments. However, it underlines the need for specific adjustments. On these lines, the Federal Council has instructed the FDF and the Federal Department of Justice and Police (FDJP) to draw up a consultation draft in the first quarter of 2019 in a bid to:
- “in civil law, increase legal certainty for the transfer of rights by means of digital registers,
- in insolvency law, further clarify the segregation of crypto-based assets in the event of bankruptcy and examine the segregation of data with no asset value,
- in financial market law, devise a new and flexible authorisation category for blockchain-based financial market infrastructures,
- in banking law, reconcile the bank insolvency law provisions with the adjustments in general insolvency law, and
- in anti-money laundering law, more explicitly anchor the current practice of making decentralised trading platforms subject to the Anti-Money Laundering Act.”
In addition, the Federal Council also took note of a report by the interdepartmental coordinating group on combating money laundering and the financing of terrorism (CGMF) on the risks posed by crypto assets and crowdfunding. It has instructed the FDF to examine whether anti-money laundering law should be adapted with regard to certain forms of crowdfunding.
Chair of the Crypto Valley Association’s (CVA) Policy and Regulatory Working Group, Dr Mattia Rattaggi, welcomed the release of the Federal Council’s report saying that it is “entirely in tune with its goal to create the best possible framework conditions for “Crypto Nation Switzerland.”
“It is positive that this is to be achieved through targeted adjustments to the existing legal framework – instead of issuing completely new laws. We feel that this approach best represents the principle of technological neutrality and is in line with the position taken by the CVA in the consultation process.
“To a large extent, the report also confirms what we, in the Crypto Valley community, have known for some time — that Switzerland’s regulatory system is already open and relatively flexible These are attributes that have been fundamental in the Crypto Valley’s emergence as a global hub of blockchain innovation.
“With the CVA Policy and Regulatory Working Group, we look forward to analysing the details of the report, communicating its contents and implications to our Membership and to continued cooperation with government stakeholders to keep building the wider Crypto Valley ecosystem.”
