SWITZERLAND Law and Practice Contributed by: Lukas Morscher and Lukas Staub, Lenz & Staehelin
ance intermediaries were however unintentional, and legislation to abandon these specific requirements has already been put to public consultation.
Some Swiss companies have issued shares on the blockchain, and FINMA has granted banking licences to two dedicated blockchain service providers, AMINA Bank (formerly Seba) and Sygnum. Driven by the fast- moving industry, traditional players such as banks are also increasingly offering services in relation to digital assets and blockchain-related businesses. For exam - ple, many of the incumbent banks now offer custody and trading for digital assets. However, few banks have built their own custody and trading infrastruc - ture (eg, Swissquote); most banks rely on a handful of specialised players. Some banks have recently been conducting pilots – eg, in the tokenising of traditional assets or in blockchain-based payments, which seem to be further areas of interest for traditional players. Also of note is the Swiss National Bank’s ongoing Pro - ject Helvetia, piloting wholesale central bank digital currency with participating institutions. Several industry bodies, such as the Swiss Bankers Association, Crypto Valley Association and the Capital Market and Technology Association, are promoting the growing blockchain-based business model for traditional and new players alike. 10.2 Local Regulators’ Approach to Blockchain In Switzerland, the general rules largely apply with regard to risks, liability, intellectual property, AML and data privacy. Regarding the application of the existing regulations on tokens and ICOs, FINMA published corresponding guidelines in 2018. Generally, FINMA focuses on the economic function and purpose of the tokens, as well as whether they are tradeable or transferable, in order to classify them as either payment tokens (including cryptocurrencies), utility tokens or asset tokens. The classification of the tokens has an impact on the appli - cable legal and regulatory framework (see 10.3 Clas- sification of Blockchain Assets ). Since then, FINMA has issued further guidelines on money laundering on blockchain, stablecoins and, most recently, staking services. In 2021, legislation designed to increase legal cer - tainty by removing hurdles for DLT-based applications
9. Regtech 9.1 Regulation of Regtech Providers
Regtech is a type of fintech focusing on technologies and software that helps companies meet regulatory requirements and stay compliant in a cost-effective and comprehensive way. Regtech software can auto - mate compliance tasks and monitor and detect risks on an ongoing basis. There is currently no specific legislation governing regtech. FINMA has generally welcomed tech appli - cations that help supervised entities comply with regulatory requirements. FINMA may define technical standards and formats if and when there is a market need for them. 9.2 Contractual Terms to Ensure Performance and Accuracy The general requirements on outsourcing apply when regulated financial service firms use regtech provid - ers (see 2.8 Outsourcing of Regulated Functions ). Depending on the specific services involved, a regtech provider must also comply with a service-level agree - ment and provide for service credit payments and other remedies in order for the customer to measure and enforce performance and accuracy. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry DLT, such as various types of blockchain, has been the focus of many public and private initiatives. First, traditional fundraising techniques and processes have been challenged in the last couple of years by the emergence of a new form of capital raising by start- ups in the form of ICOs or token-generating events based on DLT. With the advance of this technology, the focus is now shifting on tokenising traditional assets such as shares and other securities, as well as DLT-based payment solutions.
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