Switzerland has emerged as a global leader in blockchain and distributed ledger technology (DLT), cultivating a thriving ecosystem for fintech innovation. Backed by forward-thinking policies and a commitment to regulatory clarity, the Swiss government has strategically positioned itself as a hub for blockchain-based businesses. This article provides an in-depth overview of Switzerland’s legal framework for DLT and blockchain, based on the Federal Council’s 2018 report, while highlighting key legislative adjustments and future directions.
The Swiss Federal Council adopted the Legal Framework for Distributed Ledger Technology and Blockchain in Switzerland report on December 7, 2018. This comprehensive assessment was developed by the Blockchain/ICO Working Group under the Swiss Federal Department of Finance, established following a parliamentary initiative. Collaborating with the Federal Office of Justice and the Financial Market Supervisory Authority (FINMA), the group evaluated existing financial regulations to ensure they remain effective and adaptable in the face of technological innovation.
👉 Discover how Switzerland’s progressive DLT regulations are shaping the future of digital finance.
Core Objectives of the Legal Framework
The report outlines four central principles guiding Switzerland’s approach to blockchain and DLT:
- Openness to Innovation: Switzerland welcomes technological advancement and supports the responsible development of blockchain applications.
- Legal Suitability: Existing laws are largely compatible with DLT-based business models, providing a stable foundation.
- Innovation-Friendly Environment: Continuous improvements aim to strengthen Switzerland’s appeal to startups and fintech enterprises.
- Integrity Protection: Authorities are committed to preventing misuse of DLT, particularly in relation to financial crime.
These guiding principles reflect a balanced strategy—fostering innovation while safeguarding the integrity of Switzerland’s financial system.
Key Legislative Reforms
Civil Law and Insolvency Law
Under Swiss civil law, tokens are categorized into two primary types:
- Cryptocurrencies (e.g., Bitcoin): Viewed as intangible assets, their transfer does not require specific formalities. No modifications to civil law are needed for cryptocurrency transactions.
- Tokens Representing Legal Rights: These include tokens that signify debt claims, membership rights, or property interests—functionally similar to traditional securities.
To enhance legal certainty, the Federal Council recommends amending securities law to accommodate digital representation and transfer of rights via DLT. The revised framework should remain technology-neutral, ensuring that only rights already eligible for securitization can be tokenized.
A critical issue arises in insolvency proceedings, where determining asset ownership becomes complex when digital assets are held by third parties. The current legal system lacks clear rules for segregating crypto assets from a debtor’s estate. To address this, the Council proposes introducing a segregation right—similar to existing ownership protections—allowing identifiable crypto assets to be excluded from bankruptcy proceedings. This would protect investors and custodians in cases where assets are held on behalf of others.
Additionally, the possibility of extending such segregation rights to non-monetary data is under review, reflecting Switzerland’s proactive stance on digital asset classification.
Financial Market Legislation
DLT intersects with various areas of financial regulation, including banking, financial infrastructure, investment funds, insurance, and financial services. While Swiss financial laws are generally technology-neutral and adaptable, targeted adjustments are recommended.
Banking Law
The Council is assessing necessary amendments to banking insolvency rules, particularly concerning custody and asset segregation. These changes will be discussed during consultation processes to ensure alignment with DLT practices.
Financial Market Infrastructure Act (FMIA)
A new licensing category for DLT-based infrastructure providers is proposed. This would allow platforms operating decentralized trading or settlement systems to obtain formal authorization, enhancing regulatory clarity and investor protection.
Revisions to both the FMIA and the upcoming Financial Institutions Act aim to increase flexibility, enabling institutions to leverage DLT without compromising compliance.
Financial Services Act (FSA)
Although no immediate changes are planned for the FSA—which came into force in 2020—the law already addresses disclosure requirements relevant to blockchain-based financial instruments. Given the volatility and complexity of tokenized assets, firms must clearly inform clients about risks, valuation challenges, and market dynamics.
Collective Investment Schemes Act (CISA)
In September 2018, the Federal Council instructed the Department of Finance to explore amendments to CISA by mid-2019, aiming to introduce new fund categories suitable for blockchain-based investments. This would facilitate faster and more cost-effective market entry for innovative financial products.
However, DLT applications in asset management remain in early stages, making it premature to assess long-term regulatory needs fully.
Insurance Sector
Most blockchain initiatives in insurance are still experimental. While no urgent legislative action is required, the Federal Council continues monitoring developments closely to identify potential regulatory gaps.
Anti-Money Laundering (AML) and Counter-Terrorist Financing
A 2018 risk analysis by the interdepartmental AML coordination group identified potential vulnerabilities related to cryptocurrency misuse. While concrete cases remain limited, Switzerland acknowledges the evolving threat landscape.
👉 Learn how global AML standards are adapting to decentralized finance innovations.
Currently, the Anti-Money Laundering Act (AMLA) applies broadly to crypto-related activities due to its technology-neutral design. Most crypto service providers qualify as financial intermediaries and are subject to AML obligations.
However, two notable exceptions exist:
- Non-custodial wallet providers
- Decentralized cryptocurrency trading platforms
These entities currently fall outside AMLA’s scope. The Federal Council recommends explicitly bringing them under regulatory oversight, aligning with international standards such as those from the Financial Action Task Force (FATF). Ongoing assessments will determine whether additional platform types require similar treatment.
Frequently Asked Questions (FAQ)
Q: Is Switzerland supportive of blockchain innovation?
A: Yes. Switzerland actively promotes blockchain development through a clear, innovation-friendly legal framework while maintaining strong investor protections and financial integrity.
Q: Are cryptocurrencies considered legal property under Swiss law?
A: Yes. Cryptocurrencies are recognized as intangible assets, granting them legal protection and enabling enforceable ownership rights.
Q: Do tokenized securities have the same legal status as traditional securities?
A: The government is updating securities law to ensure tokenized assets enjoy equivalent status, provided they represent rights already eligible for securitization.
Q: Are decentralized exchanges regulated in Switzerland?
A: Currently, fully decentralized platforms may not be regulated. However, the Federal Council proposes extending AML rules to cover these platforms and introducing licensing options for DLT-based infrastructure.
Q: Can digital assets be protected in bankruptcy?
A: Proposed reforms aim to establish a legal segregation right, allowing identifiable crypto assets held by third parties to be excluded from insolvency proceedings.
Q: How does Switzerland handle AML compliance for crypto businesses?
A: Most crypto firms are classified as financial intermediaries and must comply with AMLA. Efforts are underway to close loopholes for non-custodial services and decentralized platforms.
Conclusion
Switzerland’s approach to blockchain and DLT combines regulatory foresight with practical adaptability. By refining civil, insolvency, financial market, and anti-money laundering laws, the country is building a robust yet flexible framework that supports innovation without compromising security or trust.
As global interest in digital assets grows, Switzerland’s model offers valuable insights for jurisdictions seeking to balance technological progress with legal certainty.
👉 Explore how next-generation blockchain regulations are driving global fintech growth.
Core Keywords:
blockchain legal framework, distributed ledger technology (DLT), Swiss fintech regulation, tokenized securities, cryptocurrency regulation, anti-money laundering (AML), insolvency law crypto, financial market infrastructure