SWITZERLAND Law and Practice Contributed by: Lukas Morscher and Lukas Staub, Lenz & Staehelin
2.2 Regulatory Regime Swiss law takes a technology-neutral and princi - ple-based approach, which has significant impli - cations for fintech companies operating in Swit - zerland. Unlike other jurisdictions, Swiss-based fintech companies benefit from a more flexible regulatory environment that allows for greater regulatory latitude. FINMA has made regulatory changes to support fintech development and lower market entry barriers. These changes are risk-based and technology-neutral. Recent leg - islative projects, including two new regulatory licence types – the so-called fintech licence, also referred to as “banking licence light” have cre - ated a technology-neutral regulatory framework for accepting deposits of up to CHF100 million from the public without engaging in typical com - mercial banking activities (see 2.5 Regulatory Sandbox ), and the DLT trading facility has cre - ated a regulatory framework for a trading venue specific to DLT-based securities. Alongside these specific measures, fintech com - panies are also subject to the general legal and regulatory framework summarised in the follow - ing (see 2.10 Significant Enforcement Actions ). Banking Legislation In Switzerland, soliciting and accepting depos - its from the public on a professional basis is a restricted activity that requires a full-fledged banking licence from FINMA. The term “deposit” is broadly defined under the Banking Act as any undertaking for own account to repay a certain amount. Deposits are considered “public” when: • funds are solicited from the public (as opposed to being solicited from banks or pro - fessional financial intermediaries, institutional investors, shareholders, employees or other related persons); and
• banking infrastructure; • deposits and lending; • distributed ledger technology (DLT); and • analytics. Many of these businesses offer their products and services to established financial institutions and/or collaborate on digitisation projects. Swit - zerland’s fintech market is primarily composed of start-ups that receive most of their funding through venture capital. In Switzerland, it is com - mon for established financial service providers to work with emerging fintech companies. The value chain of established financial service pro - viders is being scrutinised and challenged both internally and externally. Emerging fintech com - panies are developing new technology-driven products and services that have the potential to disrupt the value chain of established players. Established financial service providers gener - ally have the necessary financial and organisa - tional resources to gradually adapt their busi - ness processes, both to avoid this displacement and achieve high market visibility. Conversely, a relatively small number of emerging companies can rely on a trusted brand or a financial market licence (eg, a bank). In 2019, the Swiss Financial Market Supervisory Authority (FINMA) granted banking licences to fintech players for the first time, namely AMINA Bank AG (formerly Seba AG) and Sygnum, which specialise in assets based on DLT. Other notable fintech players have since received FINMA licences for nearly all types of traditional licences – eg, Revolut Bank UAB (Swiss authorised representative of a foreign bank), Taurus SA (securities firm), VIAC Invest AG (fund manager), Alphemy Capital SA (manager of collective assets) and SDX Trading AG (stock exchange).
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