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Switzerland Proposes Minimal Regulations for Cryptocurrencies

December 19, 2018 15:44
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FILE PHOTO: A Swiss flag is pictured next to the Jet d'Eau (water fountain), and the Lake Leman from the St-Pierre Cathedrale in Geneva, Switzerland, June 5, 2012. REUTERS/Denis Balibouse
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While countries all over the world looking to regulate cryptocurrencies, Switzerland is one of the few countries that has decided to do away with regulation. According to a report, the Swiss Federal Council has opted for minimal regulation.

The report was based on an analysis conducted by blockchain working team appointed earlier in 2018. It also noted that the legal framework of Swiss can deal with the new technologies like blockchain with just some careful modifications being made and not the fundamental ones.

The report defined cryptocurrencies  as generally synonymous with “cryptocurrencies.” The report stated that a virtual currency is a “digital representation of a value which can be traded on the Internet” and takes on the role of money, but is not regarded as legal tender and therefore should be classified as an asset (property). It concluded at that point that the economic importance of virtual currencies as a means of payment was marginal and would remain so.

While the Swiss Federal Council still puts in a word of caution, it also makes a point of emphasizing the advantages and potential that new technologies, in particular blockchain technologies, have to offer. The report said, “By exempting providers that accept public funds up to a total value of CHF1 million (approximately US$1.05 million) from the requirement to have a banking license, Switzerland aims to create a means for companies to “test innovative business ideas within a limited framework without having to comply with costly and time-consuming regulations” (regulatory sandbox).”

Talking about Initial Coin Offerings (ICO), the report said, while there are no concrete regulations in place, in February, Swiss Financial Market Supervisory Authority (FINMA) published guidelines on the regulatory treatment of ICOs,[15] which complement its earlier FINMA Guidance from September 2017.

There are several notable differences between payment tokens (cryptocurrencies), utility tokens, and asset tokens, according to FINMA’s guidelines.

While the report is reasonably lenient with cryptocurrency holders, and trading, it does propose a certain amount of tax for the holders.

The Income Tax portion of the regulations say, “If an employee receives bitcoins or other cryptocurrencies as a salary or benefit, it forms part of his or her taxable earned income. The Swiss Franc value of the cryptocurrency at the time it was received must be recorded on the salary statement. If a self-employed person receives bitcoins or other cryptocurrencies for providing goods or services, it must be included as part of the principal or additional income from self-employment at the Swiss Franc value of the cryptocurrency at the time it was received.”

This is not the first time, the country has talked about its cryptocurrency regulations. Earlier in September, Crypto-News India reported on how the Swiss Bank Association (SBA) had released a set of guidelines to Swiss banks, as it aimed to provide seamless banking services to crypto focused companies and boost the growth in the sector.

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