Presently, Switzerland is a hub of a thousand crypto businesses, thanks to its progressive crypto laws. Also, the Bank of International Settlements (BIS) has its seat in Basel.
The Swiss Financial Market Supervisory Authority, also called FINMA, regulates Switzerland’s financial markets and service providers. Based in Bern, Switzerland, it is an independent institution with control over banks, insurance companies, stock exchanges, securities dealers, and collective investment schemes. It is responsible for preventing money laundering and for resolving financial problems when necessary.
In addition to the licensing and monitoring of the supervised institutions, FINMA ensures that they comply with all the requirements of the laws, ordinances, directives, and regulations, as well as with the conditions for granting licenses that must be met at all times.
An application for a license from FINMA is required if a VASP (Virtual Asset Service Provider) wishes to operate in Switzerland.
Exchanges of cryptocurrencies are legal in Switzerland, provided they are licensed and regulated by FINMA. In Switzerland, exchanges (or, more generally, VASPs, or Virtual Asset Service Providers) are legal and regulated.
Exchanges must conduct Enhanced Due Diligence regarding AML (Anti-Money Laundering) and CFT (Combating the Financing of Terrorism).
FINMA granted cryptocurrency trading and custody licenses to two financial institutions (FIs) in 2019. By doing so, these banks can maintain business customer accounts and support the wider blockchain economy infrastructure.
Financial Institutions, exchange-traded funds (ETFs), and other financial products and services are incorporating crypto assets into their portfolios and adopting distributed ledger technology. Following Switzerland’s Blockchain Act, two more Financial Institutions were granted licenses in 2020 as a result.
Swiss ICO regulations
Swiss crypto laws are strict when it comes to ICOs. Switzerland is a hot spot for ICOs (Initial Coin Offerings). Its wealth concentration, its connection to financial markets, and other factors contribute to its popularity.
Swiss regulator FINMA adopts the ‘same business, same rules’ approach to ICOs, meaning that new technologies are not treated differently if they perform the same function. As a regulatory body, FINMA believes ICOs can be regulated under existing financial securities laws, however, it has provided insight with its “ICO Guidelines.”
ICOs are governed by legislation relating to money laundering, terrorism financing, securities trading, and CISP law.
Swiss Crypto Tax regulation
In 2020, the canton of Zug passed a law that allowed the residents of the canton to pay their taxes in crypto up to CHF 100,000.
Additionally, the Swiss Federal Tax Administration recognizes Bitcoin, Ethereum, and other popular cryptocurrencies as assets. This means that any profit made out of crypto is subject to taxation and therefore must be declared.
The Swiss Blockchain Act
The Swiss Parliament passed the Blockchain Act in 2020, as a set of amended laws. It will bring the creation of tokenized capital shares, art, and other assets that are traded via blockchain platforms. However, It is important to note, that the Blockchain Act does not involve the Central Bank’s digital currency.