SWITZERLAND Law and Practice Contributed by: Lukas Morscher and Lukas Staub, Lenz & Staehelin
6.2 Regulation of Different Asset Classes The FMIA essentially differentiates between two asset classes: • derivatives or derivative transactions – financial contracts whose value depends on one or several underlying assets and which are not cash transac - tions; and • securities – standardised certificated and uncer - tificated securities, derivatives and intermediated securities, which are suitable for mass trading. With respect to derivatives, the FMIA foresees addi - tional obligations, such as: • clearing through a central counterparty; • the use of authorised trading facilities; and • position limits in the case of commodity deriva - tives. The FMIA is generally technology-neutral and applies identically to tokens that meet the criteria to constitute a security or a derivative. The one relevant exemption is that there is a separate DLT trading facility, which is a trading venue for DLT-based securities only (see 10.2 Local Regulators’ Approach to Blockchain ). 6.3 Impact of the Emergence of Cryptocurrency Exchanges By definition, decentralised systems are particularly vulnerable to anonymity risks. Indeed, in contrast to traditional financial services, virtual currency users’ identities are generally unknown, although in most cases they are only pseudonymous, and there may be no regulated intermediary that serves as a gatekeeper to mitigate money laundering and financing of terror - ism risks. Most virtual currencies, such as Bitcoin and Ether, use a pseudonymous blockchain, mean - ing that a user’s identity is not linked to a particular wallet or transaction. However, while a user’s identity is not visible on the distributed ledger, anyone can access and view the transaction information – such as dates, value and the counterparties’ addresses – that is publicly recorded on it. Therefore, enforcement authorities can, in the course of their investigations, track transactions where a user’s identity is linked to an account or address (such as wallet providers or exchange platforms).
Swiss AML legislation does not provide for a definition of virtual currencies. However, since the revision of the FINMA AML Ordinance in 2015, exchange activities in relation to virtual currencies – eg, money transmis - sion with a conversion of virtual currencies between two parties – are subject to AML rules. In general, the exact scope of regulation applicable to crypto - currency exchanges depends on the level of decen - tralisation and activities involved (see 6.1 Permissible Trading Platforms ) as well as the economic function and transferability of the blockchain-based units – ie, tokens (see 10.2 Local Regulator’s Approach to Blockchain and 10.3 Classification of Blockchain Assets ). Most recently, FINMA issued specific guidance for the staking of crypto-assets in 2023, for stablecoins in 2024 and for the custody of crypto-assets in 2026. 6.4 Listing Standards The FMIA requires authorised stock exchanges and multilateral trading facilities to implement appropri - ate self-regulation, which is binding on the partici - pants. SIX Swiss Exchange, as the dominant stock exchange, issues listing rules that have been amend - ed to reflect the new financial market regulation (see 2.2 Regulatory Regime ). 6.5 Order Handling Rules The FMIA requires authorised stock exchanges and multilateral trading facilities to implement rules on orderly and transparent trading, and to monitor trading in order to detect violations of statutory and regulatory provisions. The detailed rules are thus issued by the relevant trading facility – eg, SIX Swiss Exchange. Fur - thermore, best execution rules apply (see 3.3 Issues Relating to Best Execution of Customer Trades ). Note that these rules would not apply to tokens that do not constitute a security. 6.6 Rise of Peer-to-Peer Trading Platforms Under the FMIA, organised trading facilities for trad - ing securities and other financial instruments require the relevant FINMA authorisation (see 6.1 Permissible Trading Platforms ), which includes strict limitations – eg, on authorised participants in such a trading facil - ity, which in essence excludes P2P trading. The new DLT trading facility allows, to a certain extent, for P2P
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