SWITZERLAND Trends and Developments Contributed by: Kilian Schärli, Reto Luthiger, Andrea Trost and Diana Lafita, MLL Legal
facilitate open banking, to open interfaces and to facilitate data exchange amongst different stakeholders. Further, OpenBankingProject.ch has been launched to examine how open bank - ing can support the financial services industry. So-called embedded finance, which is a major trend related to open banking, integrates a finan - cial service within another product or service and hence enhances the user experience. The introduction of an electronic identification (e-ID) system, which is expected to launch in 2026, may accelerate the development of embedded finance solutions. Crypto services: use of distributed ledger technology to register ownership and conduct transactions and trading The potential of the blockchain and distributed- ledger technology remains largely untapped for the most substantial part of the financial services industry, in Switzerland and abroad, being used only to a very limited extent in asset management. Regulation is mainly to blame for this. The Swiss Financial Market Supervisory Authority (FINMA) issued its initial coin offering (ICO) guidelines in 2018, outlining its regulatory practice for the qualification of tokens. Payment tokens (synonymous with cryptocurrencies) are tokens intended to be used, now or in the future, as a means of payment for acquiring goods or services or as a means of money, value storage or transfer. Payment tokens are not treated as financial instruments if they are operational on a blockchain. The acceptance of payment tokens from the public can however trigger the applica - tion of the banking or fintech licence regulations. Sygnum Bank and AMINA Bank are well known banks in the fintech space that offer storage of cryptocurrencies. Besides banks, Switzerland has several pure-play wallet providers such as Relai, Swiss Fortress and Thor Wallet. These
kinds of providers hold cryptocurrencies in either individual custodial wallets or non-custodial wal - lets, neither of which is affected by bankruptcy of the service provider. This is the reason why they do not require a banking licence, but in case of custodial wallets may be subject to AML regula - tions. In contrast, so-called asset tokens, which represent a claim against an issuer (such as a debt or equity claim), qualify as securities if they are standardised and mass-tradable. They are treated according to their economic function, for instance as shares (equity), bonds, derivatives, collective investment schemes or structured products. Their issuance can become subject to financial market regulations, such as licensing for underwriting or derivatives issuance activi - ties, or prospectus obligations. Utility tokens that provide access (digitally) to applications or services through a blockchain-based infrastruc - ture do not qualify as financial instruments and are accordingly not subject to financial market regulations. So far, banks and securities dealers, which already hold the relevant licence, have not issued any stablecoins. Stablecoins have the potential to disrupt payment systems and tradi - tional business models, and can potentially pose a challenge to monetary policy, as they can be seen as a substitute for fiat currencies. In July 2024, FINMA published its Guidance 06/2024 on stablecoins, resulting in a change to its regu - latory practice. According to FINMA, the AML regulations now also apply to secondary mar - ket transactions by the issuer of a stablecoin. Therefore, regulatory hurdles remain to be over - come for stablecoins to succeed in the Swiss market. At the same time, since December 2023, the SNB has been testing a wholesale central bank digital currency (CBDC) on the regulated platform SIX Digital Exchange (SDX), and Swiss Stablecoin AG has led the initiative with respect
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