Parliament paves the way for Blockchain technology

Blockchain | DLT | FinTech, Banking and Financial Market Regulations

Switzerland should be able to develop further as a location for blockchain and distributed ledger technology (DLT). After the National Council, the Council of States has also approved changes to the law intended to improve the framework conditions for this industry.

The initiative for the adjustment of the framework came from the Federal Council, whose objective is to promote modern technologies in the long term. Last year, it passed a draft law that provides for selective adjustments in the areas of civil- and financial market law. These measures are intended to increase legal certainty, remove obstacles to blockchain applications and limit the risk of abuse.

The Federal Council is expecting digitalization to continue to advance. Legal security and a good environment for innovation should attract technology companies and investors to Switzerland. Switzerland already has a blockchain ecosystem that is highly regarded worldwide, which includes start-ups in the development sector as well as an increasing number of banks and financial market providers. The heart of the ecosystem is certainly the Crypto Valley, with centres in Zug and Zurich.

The National Council has made various adjustments to the Federal Council's proposal, which the Council of States accepted last week without any additional changes. The draft law was changed especially with regard to data access and the ombudsman’s offices. Among other things, financial service providers who exclusively provide financial services for institutional or professional clients are to be exempted from the obligation to affiliate to an ombudsman's office. This would reduce the administrative burden put on small DLT trading systems. In order to reduce abuses, a new category of authorization for the commercial operation of DLT infrastructure providers is also to be created.

In the overall vote, the National Council accepted the proposal with no opposing votes. It is now ready for the final vote. It is currently expected that the new framework will come into force in 2021.

September 2020 | Authors: Andreas Glarner, Nathalie Uhe

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