Switzerland is carrying on building a strong and innovative regulatory base for the new form of finance, Distributed Ledger Technology (DLT). Within this perspective, the Swiss Parliament started to implement a new regulation for Blockchain and DLT technologies with a wide spectrum. The new regulation will let issuing DLT securities starting from February 2021 and the other components of the regulation; like Anti-Money Laundering Law, Insolvency Law, Financial Market Law, and Civil Law; will be effective from August 2021.
One of the key steps in the regulation is offering services in trading, clearing, settlement, and custody with DLT-based assets. With the base which is provided by the regulation, besides regulated financial market players, other legal entities and individual customers will be able to be part of these services. This will entirely enlarge the stakeholder base in the cryptoasset marketspace; more participants means more funds.
Another key step is introducing a new form of a digital asset which is called ‘Uncertificated Register Securities’. The regulation put new amendments on traditional security token definition and created a path for corporations for issuing their shares in a tokenised form. With increasing the stability and legal perception, tokenisation of rights, properties, assets, etc. will have the same stability and predictability as traditional securities.
Typically, being a player in Swiss tokenised market requires pre-defined licensing requirements. The regulatory body FINMA foresaw two main classifications for these groups; a limited license type with lower financial requirements and a more comprehensive license type for more higher transaction volumes and more sophisticated products.
The custody rights will be also diversified with the insights of the new regulation. With a quantitative and qualitative easing, the provision of custody services will not require a banking license but will be asked a ‘FinTech License’. The custody process of digital assets will be considered as a deposit account, which will bring more players to the crypto asset market and will decrease operational and maintenance costs in the short term.
Building a strong market means building resilient regulations for fund owners and giving adequate freedom to investors. Switzerland was one of the core centers of liquidity in the past and now is preparing for being an overwhelming medium for the new form of finance. We will touch on more points about new standards and innovative investment solutions in the following articles. For any further questions, please reach us via email@example.com or visit our CryptoIndexSeriesTM Platform for a better analysis of the crypto market space.
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