In a bid to eliminate regulatory uncertainty and promote innovation as well as investor protection, the Swiss Federal Council has launched a consultation paper aimed at making federal law applicable to its distributed ledger technology (DLT) ecosystem, this according to a press release on March 22, 2019.
Federal Council Initiates Consultation
The federal council in Switzerland has initiated a consultation that is focused on improving the regulatory framework around blockchain technology and its application on the nation’s financial sector.
The draft reveals that the council’s aim is to bring about legal clarity in the development of blockchain-based applications, encourage the growth of these applications, and reduce the risks that may arise from their misuse.
Likewise, reference was made to a legal framework report from December 2018 which was adopted by the council which aims to establish the best conditions that will enable Switzerland to become an innovative, sustainable, and leading location for fintech and () companies.
Improving the Legal Framework
The report also noted that even though the country’s current legal framework can handle new technologies including the blockchain, it’s still important to focus on specific areas that are in dire need of improvements.
Some key areas that were outlined by the Federal Council in its consultation draft in December 2018 include the ability for a security firm to obtain a license in the region in order to operate an organized trading facility.
Similarly, an update to the Swiss Code of Obligations and Federal Law on Debt Collection and Bankruptcy needs to be made in order to bring about legal clarity as to how cryptocurrencies can be transferred.
The document also emphasizes the creation of a new authorization category in the financial market infrastructure law; a category that will be aimed at blockchain-based trading facilities.
The Swiss Federal Council stated:
“These are intended to be able to offer regulated financial market players and private customers services in the areas of trading, clearing, settlement, and custody with DLT-based assets,”
Precise Definition of Laws Targeting Money Laundering
Asides from providing legal clarity, other aspects that were touched include money laundering where the Federal Council has proposed that more precise definitions be given to the crypto markets.
The council has also inquired if the legislation for the prevention of money laundering and terrorist financing should also influence initial coin offerings (ICOs) even though some jurisdictions have not created laws aimed at these type of platforms.
Nevertheless, it has been pointed out that the suggested amendments are not a part of the current consultation that was made today.
Instead, they will act as an amendment to the Anti-Money Laundering Ordinance.
A lot of countries are looking into the area of blockchain and most especially, how to regulate the use and trading of bitcoin and other blockchain-based cryptoassets
In related news, on March 12, 2019, BTCManager informed that German authorities are trying to regulate electronic securities and ICOs, as part of plans to develop a robust blockchain strategy that will strengthen its fintech industry.