Switzerland Unveils Legal Blockchain Framework In Crypto Valley Association Partnership
Switzerland Unveils Legal Framework For Blockchain Technology In Partnership With Crypto Valley Association
Switzerland has once again shown itself to be one of the world’s leading authorities on blockchain technology. This past week, Switzerland unveiled a new legal framework for distributed ledger technology.
The regulations were unveiled during a Federal Council meeting on December 7. The 162-page document covers the various impacts of blockchain and distributed ledger technology.
The report was prepared in consultation with internal and external stakeholders, including the Crypto Valley Association, which provided input through its Policy and Regulatory Working Group.
The Crypto Valley Association is a Switzerland-based non-profit association supporting the development of blockchain and cryptographic-related technologies and businesses. The CVA’s Policy and Regulatory Working Group is led by Dr. Mattia Rattaggi.
“Crypto Valley” is a term for the area around Zug, Switzerland where a number of blockchain companies are based. The area is becoming increasingly concentrated with blockchain startups due to Switzerland’s progressive financial laws. Just like Silicon Valley in California was the hub of the internet revolution, Crypto Valley wants to be the hub of the blockchain revolution.
The report is titled “Legal framework for distributed ledger technology and blockchain in Switzerland”. It was released by the State Secretariat for International Finance (SIF) earlier today.
Explains Switzerland’s SIF in a press release discussing the report
“It is predicted that distributed ledger technology and blockchain technology have considerable potential for innovation and enhanced efficiency both in the financial sector and in other sectors of the economy.” “The Federal Council wishes to exploit the opportunities offered by digitalization for Switzerland.”
The goal of the regulation is 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 blockchain companies.
The regulations are also expected to reduce criminal activity in the blockchain space:
“Moreover, it wants to consistently combat abuses and ensure the integrity and good reputation of Switzerland as a financial centre and business location.”
After releasing the report, Switzerland’s Federal Council instructed the Federal Department of Finance (FDF) and the Federal Department of Justice and Police (FDJP) to draw up a consultation draft in the first quarter of 2019 that will lead to industry-specific regulations, including civil law, insolvency law, financial market law, banking law, and anti-money laundering law catered to the blockchain space.
Some of the topics covered in the current report include:
- Applications of distributed ledger technology in the financial sector
- Fundamentals of distributed ledger technology and blockchain, including how blockchain and DLTs work
- The international environment for blockchain technology, including Switzerland’s position in the blockchain space and the way in which other countries are handling it
- Legal basis for blockchain regulations under civil law, including the legal classification of tokens under current Swiss laws, data ownership rights, token transfers, and more
- Treatment of crypto assets and data in insolvency proceedings, including the segregation of cryptocurrencies in divorce proceedings and similar procedures
- How financial market laws apply to crypto
- How current Swiss regulations, including the Financial Institutions Act (FinIA) and Federal Financial Services Act (FinSA) apply to blockchain
- How to create regulations that effectively govern blockchain technology while still combating terrorist financing and money laundering, among other illegal activities
You can read the full report from Switzerland’s Federal Council here.