Switzerland has long been known as an innovator, even earning the title of the most innovative country in the world. The nation has a proud history of adopting new technologies and registering patents, with an entrepreneurial, forward-thinking spirit that permeates businesses all over the country. This has just been taken one step further thanks to the parliamentary passing of new finance and corporate law amendments which officially recognise the blockchain and cryptocurrency industry.
What are blockchain and cryptocurrency?
Blockchain has been a major buzzword in Switzerland – and around the world – in recent years, for many reasons. As a technology that enables the existence of cryptocurrency, blockchain provides data security solutions, allowing users to make and confirm transactions without needing a central clearing authority. It has a range of applications within different industries, particularly within banking and finance where it has enormous potential for fund transfers and settling trades.
A cryptocurrency, meanwhile, is a digital medium of monetary exchange, using encryption techniques to control the creation and transfer of funds. When most people think of cryptocurrency they’ll think of Bitcoin, which is the name of the market-leading cryptocurrency for which blockchain technology was invented. Cryptocurrency hasn’t always had the most positive public image and has in the past been associated with money laundering and crime, with different countries taking different approaches to the regulation of cryptocurrencies. Switzerland, however, has always been one of the world’s most crypto-friendly nations, with a strong cryptocurrency network in Zug and around 900 blockchain companies calling Switzerland home.
What do the new Swiss laws mean?
In early September, Swiss Senate parliamentarians passed a set of financial and corporate law reforms, which included the “Blockchain Act”. The Act was unopposed in the House of Representatives which suggests it will likely come into effect as law in early 2021. The ground-breaking law will bring blockchain and cryptocurrency into the mainstream, removing obstacles for applications and creating more legal security and abuse prevention. It will set standards for crypto exchanges, facilitating providers who only serve institutional and professional customers and creating a new framework to limit the risk of distributed ledger technology (DLT) abuse. All of this could potentially create a platform for a decentralised finance landscape, providing plenty of new job opportunities in both the technology and financial services sectors.
Switzerland boasts a range of crypto banks, alpine cryptocurrency vaults, different blockchains, digital currency projects and digital stock exchanges, making it perfectly positioned to embrace new blockchain and cryptocurrency laws. If and when the laws are passed, there will be “an established legal basis for exchanging digital-only securities and for reclaiming digital assets from bankrupt companies”, according to Swissinfo, something which Swiss banks will be paying close attention to. After the somewhat chaotic 2017-2018 phase of blockchain start-up crowd funding, more regulations and security will be a welcome change, and banks would be smart to consider how they could incorporate blockchain and cryptocurrency in a bid to remain competitive. We’ve already seen Credit Suisse and UBS begin to test the potential of DLT trading, while Julius Bär has established a partnership with crypto bank SEBA, and a handful of private banks are already offering cryptocurrency services to some clients. As the laws look set to usher in a new era for crypto and blockchain, we can expect to see similar moves being made throughout the banking world.
Keep informed with Swisslinx
At Swisslinx, our company’s roots lie within technology, which means we have a vested interested in keeping ahead of the latest market tends. We have a special interest in fintech and disruptive technologies and organisations, as well as the more established financial institutions in Switzerland and around the world. This makes us ideally positioned to support both candidates and clients in the markets of technology and financial services. Contact us to see how we can work together, or follow our blog to stay up to date with the latest industry news.