Switzerland tries to foster its position as a top-blockchain jurisdiction by creating more fintech-friendly legislation. Legal amendments should make the issuance of tokenized securities easier and create legal certainty.
Switzerland has introduced a new law on tokenized securities on the 01st of February. The law allows tokenized securities to trade on a blockchain with the same legal standing as traditional assets.
“Previously, you had uncertificated rights there that had to be assigned, and a lot of smart people were looking at how that could be done on-chain,” said Alexander Vogel from the Swiss law firm Meyerlustenberger Lachenal (MLL). “With these new registered rights, it’s clear that you have legal certainty. If they are properly transferred on a blockchain, the new owner who holds them in his or her wallet is definitely the owner of these rights.”
Sygnum and SEBA issue tokens
The DLT amendments to the existing legislation recognize tokenized securities as a new asset class. Legal ownership rights are automatically transferred via the blockchain to each new investor.
Switzerland’s two regulated crypto banks, Sygnum and SEBA, have already used the law by issuing tokenized securities. Sygnum announced on the same day that the bank would issue tokens for a range of premium investible wines from Fine Wine Capital AG. SEBA is issuing its Series B equity shares as Ethereum ERC-20 tokens. A representative of the company said the tokens would enable “seamless connectivity for trading and liquidity on future internationally recognized digital liquidity venues.”
Another approach than Liechtenstein
Contrary to Liechtenstein, which has introduced the so-called Blockchain Act in January 2020, Switzerland has decided not to introduce an entirely new law but instead amend existing legislation. Swiss lawmakers believe the current legal framework can be tweaked to accommodate digital assets.
The fact that Liechtenstein has pushed forward with its Blockchain Act has undoubtedly been one reason why Switzerland has decided to make its laws more blockchain-friendly. Several companies have left Switzerland and moved at least part of their operations to Liechtenstein – although for many of these companies, the key reason to make a move was easier access to the European market. The Blockchain Act may have only been part of their considerations.
The blockchain sector has welcomed the new law. Matthew Alexander, Head of digital corporate finance and asset tokenization at SEBA Bank, told Coindesk: “Switzerland’s strategy is to provide a bridge into this new digital economy and the transition from traditional fiat ways of banking and security assurance.” Still, it’s not all roses: Getting the necessary licenses from Swiss regulators remains expensive and takes time.