Switzerland proposes New Crypto License Categories and Strengthens Consumer Protection

Introduction

On October 22, 2025, the Swiss Federal Council opened the consultation on proposed amendments to the Financial Institutions Act (FINIA). With this move, Switzerland is refining its fintech and crypto regulations by introducing two new financial market license categories: the Payment Instrument Institution and the Crypto-Institution. These licenses aim to foster innovation in blockchain, DeFi, and digital assets while safeguarding financial stability and enhancing consumer protection.

The draft regulations could undergo significant changes in the coming months and are unlikely to take effect before 2027. Nevertheless, for stablecoin issuers and crypto service providers, this new framework introduces important considerations. What requirements will these new classifications involve? How do they align with similar rules in the EU? Additionally, what are the cross-border impacts, such as those affecting foreign issuers of CHF-denominated stablecoins?

1. The New License Categories

The proposed Payment Instrument Institution license is intended to replace Switzerland’s current “fintech license” and shall be tailored for companies that accept customer funds (deposits) without lending or paying interest. Its primary innovation will be to allow licensed firms to issue stablecoins (called “stable crypto-based payment instruments”) under clear rules. Key features and obligations include:

• No Deposit Cap: The previous CHF 100 million limit on accepting public deposits is removed, enabling these institutions to scale without a hard cap.
• Stablecoin Issuance: Only Payment Instrument Institutions can issue CHF-pegged stablecoins (or those pegged to other single fiat currencies) in Switzerland. Such stablecoins must be fully backed by equivalent assets and redeemable at par value on demand to ensure stability and trust.
• Consumer Protection: Client funds must be segregated. In case of insolvency, customer assets are not part of the institution’s bankruptcy estate, enhancing customer safety.
• Disclosure Requirements: Issuers of stablecoins must publish a white paper (information prospectus) detailing the token’s terms, reserves, and risks. Advertising these tokens must meet the same truthfulness standards as traditional financial products.
• Anti-Money Laundering (AML): Payment Institutions are classified as financial intermediaries under Swiss AML law. They face strict AML/CFT compliance duties, including thorough KYC checks and monitoring of stablecoin transactions. However, it is important to note that the issuer is required to conduct KYC checks only on the primary market purchaser and the party redeeming a stablecoin. Secondary market transactions are not subject to KYC obligations.
• Standalone License: This license is exclusive – even banks must form a separate subsidiary to obtain a Payment Institution license if they wish to issue stablecoins. The rationale is to avoid conflicts with other banking activities and ensure focused oversight on stablecoin issuance.

The Payment Instrument Institution framework shall give fintech firms a clear, regulated path to launch stablecoins and handle customer funds, boosting market credibility. It also aligns Swiss practice with international standards for stablecoins (in particular, full backing and redemption rights) while improving on the “old” fintech license by enhancing consumer protection and removing growth barriers.

The proposed Crypto-Institution license is intended to cover businesses providing services with cryptocurrencies or other crypto-assets (excluding those covered by the Payment Instrument Institution category). It brings under regulation many activities that were previously unlicensed in Switzerland (aside from subordination under AML regulations). Key covered services and obligations include:

• Scope of Services: Crypto-Institutions can offer custody of crypto assets, operate crypto trading platforms or brokerages, facilitate client trading of cryptocurrencies, provide market-making/quoting, and even perform staking services for clients. In essence, this license targets exchanges, custodians, brokers, and similar Virtual Asset Service Providers in the Swiss market.
• Covered Assets: The law defines “cryptoassets for trading” broadly – including typical cryptocurrencies like Bitcoin and stablecoins issued abroad – but excluding other token types such as pure utility tokens, central bank digital currencies (CBDCs), securities tokens, or bank deposits.
• Prudential Standards: Licensing and operating requirements mirror those for securities dealers (securities firms), though adapted for crypto’s different risk profile. Crypto-Institutions must have adequate capital, risk management, and conflict-of-interest policies. For example, uncovered proprietary trading or lending is prohibited under a Crypto-Institution license – if a crypto firm wants to offer margin trading, loans, or complex derivatives, it would need a full securities firm or banking license.
• Client Protection Rules: Certain Financial Services Act (FinSA) provisions will apply to crypto services. This means Crypto-Institutions will need to follow rules on client onboarding, suitability and appropriateness checks (when giving advice or offering complex products), transparency in fees and risks, and managing insider trading or market abuse risks on their platforms. Any public offering of crypto tokens (that qualify as “payment tokens”) may require a published white paper to inform investors of the key details.
• AML Compliance: Like Payment Instrument Institutions, Crypto Institutions are subject to Swiss AML regulations. They must implement robust AML/CFT measures, given the higher risk profile of crypto transactions. Many existing crypto service providers in Switzerland, who previously just registered with a self-regulatory organization for AML, will now need to transition to full FINMA oversight via this license. This elevates compliance but also potentially increases customer confidence in Swiss crypto services.

The Crypto-Institution license category is aimed at integrating crypto intermediaries into the regulated financial system. It closes regulatory gaps by ensuring exchanges and custodians meet baseline standards for security, integrity, and client care. For crypto businesses, this license provides a clear path to operate legitimately under FINMA oversight, potentially making Swiss crypto services more reputable and accessible to mainstream clients.

2. Comparison with EU E-Money License and MiCA’s CASP Regime

Switzerland’s approach with these two licenses parallels developments in the European Union, though with some distinctions:

• Stablecoins: The Swiss Payment Instrument Institution is similar in purpose to the EU’s Electronic Money Institution (E-Money) license and MiCA’s stablecoin frameworks. Under the EU rules (notably MiCA, the Markets in Crypto-Assets Regulation), a stablecoin pegged to a single fiat currency (an “e-money token”) can only be issued by a licensed entity (typically an e-money institution or bank) with full reserve backing and redemption rights – much like the Swiss requirement that stablecoins be fully backed and redeemable. Both regimes seek to protect coin holders and financial stability by regulating issuers, but Switzerland’s license is purpose-built for crypto-based payment tokens and even prohibits traditional banks from mixing this activity into their core license (requiring a separate entity for stablecoin issuance). The EU, by contrast, often allows banks or e-money firms to issue stablecoins under their existing framework (with added MiCA requirements).
• Crypto Service Providers: The Swiss Crypto-Institution license is a close counterpart to the EU’s Crypto-Asset Service Provider (CASP) regime under MiCA. MiCA defines CASP authorization requirements for activities like operating a crypto exchange, providing custody/wallet services, or brokerage – all with prudential and conduct rules to protect users. Switzerland’s Crypto-Institution consolidates these activities under one license with standards similar to a securities dealer, ensuring fit-and-proper management, capital adequacy, and investor protection measures. A major difference is in their coverage: the proposed Swiss law excludes pure utility tokens and certain other assets, so services involving utility tokens remain unregulated. In contrast, MiCA covers services related to nearly all relevant crypto-assets. In practice, however, both frameworks share the goal of comprehensive oversight of crypto intermediaries, aligning with international norms (like Financial Action Task Force guidelines and the Financial Stability Board’s recommendations).

3. Transition Periods: What Existing Providers Need to Know

The draft legislation provides a uniform transition period for both new license categories, the Payment Instrument Institutions and the Crypto-Institutions. The rules distinguish between already supervised entities and those newly subject to licensing under the revised FINIA.

• Entities already licensed under existing Swiss financial market laws (e.g., banks, securities firms) that carry out activities covered by the new Payment or Crypto Institution categories do not need to apply for a new license. However, they must ensure full compliance with the new regulatory requirements within one year after the amended law enters into force.
• Entities that were previously unregulated but now fall under the new licensing requirement, such as stablecoin issuers, wallet providers, or crypto brokers, must submit a license application within one year of the law’s effective date. They may continue operating during the transition period, but only if they are affiliated with a recognized self-regulatory organization (SRO) under the Swiss Anti-Money Laundering Act and remain under SRO supervision, and if they meet specific criteria.

In short, companies that already operate under FINMA oversight must adapt their operations to the new rules within twelve months, while newly regulated providers face a one-year deadline to apply for a license, conditional on proper interim AML supervision. Businesses not meeting these criteria will have to suspend their operations once the transition period expires.

4. Excursus: Cross-Border Implications – Foreign CHF Stablecoin Issuers

What if a foreign company (outside Switzerland) launches a stablecoin denominated in Swiss francs (CHF)? This scenario raises important cross-border considerations under the new suggested Swiss law:

• No Direct Swiss License – but Swiss Impact: A CHF-pegged stablecoin issued abroad would not fall under the Swiss Payment Institution regime because it isn’t issued by a Swiss-licensed entity. In Swiss regulatory terms, such a coin would be treated as a crypto-asset, not an official “stable crypto-based payment instrument.” Practically, this means the foreign issuer would not need a Swiss license just for issuing it unless it has a physical presence or active operations in Switzerland. Swiss law is territorial: simply referencing CHF doesn’t automatically trigger Swiss jurisdiction over a foreign company.
• Treatment in Switzerland: Under the proposed rules, stablecoins issued abroad (including CHF-backed ones) are considered “cryptoassets for trading”. Swiss-based intermediaries (exchanges, brokers, custodians) dealing in such a token must be licensed as Crypto-Institutions. In summary, if a foreign CHF stablecoin is traded or held by a Swiss company on behalf of clients, the company must obtain the appropriate license and comply with all relevant Swiss regulations, including anti-money laundering (AML) requirements. This framework provides regulatory oversight of foreign stablecoins entering the Swiss market and safeguards the interests of Swiss users, irrespective of the issuer’s jurisdiction.
• Regulatory Cooperation: Swiss regulators will likely keep a close eye on any widely used CHF stablecoin issued abroad, given potential implications for monetary policy and consumer protection. While there isn’t a specific ban on unlicensed foreign CHF stablecoins, Switzerland’s stance (much like the EU’s under MiCA) is that credible stablecoins should be issued within a regulatory framework. A foreign issuer aiming for Swiss users’ trust might consider partnering with a Swiss Payment Instrument Institution or establishing a Swiss entity to issue the CHF stablecoin under license, thereby demonstrating compliance and reliability to the market.
• EU Context: Under MiCA regulations, issuers of stablecoins referencing an EU currency such as the Euro are required to be established within the European Union and obtain appropriate licensing, thereby ensuring jurisdictional oversight. Although Switzerland has not explicitly imposed similar requirements for CHF stablecoins, the prevailing market and regulatory conditions generally favour CHF stablecoins that are issued under Swiss regulatory supervision rather than from offshore entities.

Foreign projects considering issuing a CHF-denominated stablecoin should be aware that Swiss law will impact their token’s use in Switzerland. Swiss financial intermediaries can only handle such CHF stablecoin if they comply with the Crypto-Institution rules, and Swiss authorities will expect high standards of stability and transparency. Aligning an offering with Swiss regulatory expectations (possibly via a Swiss license) could be crucial for market acceptance in Switzerland.

5. Conclusion and Next Steps

Switzerland’s newly proposed Payment Instrument Institution and Crypto-Institution licenses mark a significant evolution in its fintech and crypto landscape. These tailored categories provide business clarity and confidence: stablecoin issuers get a dedicated framework to operate with integrity, and crypto service providers can legitimize their operations under FINMA supervision. For clients in the blockchain, DeFi, and digital asset space, Switzerland is reinforcing its reputation as an innovation-friendly yet secure jurisdiction, balancing opportunity with robust safeguards.

The consultation period now lasts until February 6, 2026.Considering the feedback received during the consultation period, a revised draft will be prepared for discussion and finalization by the Swiss legislator. We anticipate that the proposed regulations will not be ready to take effect before 2027.

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