Switzerland has introduced legislation to make using and trading crypto-assets easier. The Swiss Senate has approved legal changes that enable companies to create digital shares and other tradeable assets. What the new laws entail, and what it could mean for Liechtenstein?
Switzerland has published a set of legal changes last week. These reforms of financial and corporate laws complement earlier legislation passed by the parliament last summer. They address the exchange of digital securities and set standards for the exchange of digital currencies, with the overall goal of legitimizing the nascent asset class.
Besides defining the legalities of exchanging digital securities, the new law also covers the legal process of reclaiming digital assets from companies that go bankrupt. It further clarifies the legal requirements for cryptocurrency trading exchanges to mitigate the risks of money laundering. Urs Bolt from Zurich-based IT company ti&m said these laws would “make it easier for neo crypto finance firms and incumbents alike.”
Industry experts welcome the changes
Unlike Liechtenstein, Switzerland did not create any new laws but rather amended its existing legal framework. As the sector keeps developing, more such amendments will likely follow. Germany has chosen a similar path, allowing banks to sell and store crypto-assets and introducing a bill for digital securities last month.
Switzerland’s blockchain industry welcomed the changes. “Overall, it will create one of the most favorable regulatory environments in the world. It will allow the financial center to lead in the digital asset space and hopefully attract new business into Crypto Valley,” said Bolt.
Stefan Deiss, founder and CEO of Blockchain Propulsion, said, “This legislation not only paves the way to the tokenization of company shares and various other tangible assets but progressively pushes the industry towards the decentralization of finance.”
Will Liechtenstein lose a competitive advantage?
The new laws will also affect Liechtenstein. Liechtenstein was the first country introducing comprehensive legislation for the blockchain space early this year. The “Blockchain Act” was widely regarded as the first attempt to create the regulatory framework for a token economy and has motivated crypto and blockchain businesses to move to Liechtenstein.
That competitive advantage is now slowly diminishing because neighboring countries are moving forward with their own initiatives. “After Liechtenstein passed its “Blockchain Act” last year, which came into effect in January this year, the Swiss government had to move quickly to pass its own “Blockchain Act” to maintain its leading position as the most crypto-friendly nation in the world,” said Stefan Deiss.
He might be right. That said, businesses that decide to move to Liechtenstein instead of Switzerland do not only consider different legalities, but also Liechtenstein’s EEA-membership, which makes it easier to passport services to other European countries. That, however, has recently not been as smooth as expected, as other nation’s regulators have blocked several efforts from Liechtenstein-based businesses. So how much advantage will Liechtenstein be able to preserve, especially now, as Switzerland is moving ahead?
The final vote on Switzerland’s Blockchain legislation is expected at the end of September but it’s a mere formality. Once Switzerland has formally introduced the legal changes, it might soon be leading the pack on blockchain technology.