State of Cryptocurrency Regulations Part 14: Switzerland and its Tryst With Cryptocurrencies
Switzerland and cryptocurrencies are a match made in heaven. Both are highly decentralized, both have a prominent place in finance and both have been called out for promoting tax evasion. When you look at these similarities, your mind may obviously ask what cryptocurrency regulation looks like in Switzerland. And in this article we’re going to answer this question for you. Let’s begin:
Current Legal Status of Cryptocurrencies in Switzerland
Bitcoin and other cryptocurrencies are absolutely legal in Switzerland for payment and trading both. In fact, the official website of Swiss Financial Market Supervisory Authority (FINMA) states that “The use of bitcoins as a means of payment is not state-controlled”. This means that in Switzerland no license is needed for paying and receiving payments in Bitcoins. Moreover, some of the government owned companies sell Bitcoins in Switzerland (i.e. Swiss Federal Railways). In Zug, popularly known as Crypto Valley, you can also pay taxes with cryptocurrencies.
However, some cryptocurrency-related activities are subject to country’s Anti-Money Laundering (AML) Act. Operating a cryptocurrency trading platform or trading cryptocurrencies on a commercial basis requires compliance with AML Act. But even that requirement doesn’t make obtaining a license necessary as there’re two ways to operate such a business in Switzerland:
- First is by directly obtaining a license from FINMA, which has not been done by almost all cryptocurrency companies operating in the country;
- And second is to get membership of a Self-Regulatory Organization (SRO). The SROs are organizations that meet certain criteria set out by FINMA. They ensure that all their members comply with AML rules of Switzerland, and punish the members who don’t comply. All financial intermediaries not licensed by FINMA take this route, including cryptocurrency companies.
ICOs are also supported in Switzerland as long as they follow the guidelines of FINMA and comply with regulations set out by the authority. FINMA has made 3 categories for ICOs, and every coin offering needs to comply with the requirements set out for its particular category:
- First category is that of Payment ICOs. These’re offerings whose tokens are transferable and can be used as means of payment. The issuers of these ICOs need to comply with AML rules.
- Second category is of Utility ICOs. These tokens confer rights to a digital product or service. Issuers of these tokens don’t need to worry much about regulations.
- Third and last are Asset ICOs.These’re offerings that pay dividends or interest, or give rights to the earning stream of company behind them. These ICOs are regulated as securities and must comply with strict security laws of country.
Just keep your categorization in mind and stay compliant with associated regulations, and you can run a fully legal ICO in Switzerland.
Cryptocurrency Regulation in Switzerland: Recent Developments
Frankly speaking, Switzerland has never tried to regulate cryptocurrencies. The only thing they did was determining the crypto activities that need to be regulated under AML act, which was done way back in 2014. Since then they went silent on the whole topic and their country kept flourishing as a major hub for cryptocurrency companies. The authorities of country have started speaking about cryptocurrencies only in recent days, and that too in a highly favorable manner. For example, in January country’s Economics Minister Johann Schneider-Ammann said that Switzerland wants “to be the crypto nation”. A month later FINMA also came out with ICO regulation guidelines to make everything very clear for crypto startups operating in the country.
Future of Cryptocurrency Regulation in Switzerland
When it comes to cryptocurrency regulation, Switzerland’s approach is most relaxed in the world. And there’s a good reason behind it – the country has been losing its sheen as financial service provider of Big Boys, and cryptocurrencies give a major opportunity to arrest that decline. So we can expect the country to retain its highly positive approach towards cryptocurrencies for a long time.