Switzerland has been recognized for some time as a hub of blockchain and cryptocurrency innovation. The picture postcard town of Zug, situated just south of Zurich on the banks of the Lake Zug, has become an unlikely home to blockchain and cryptocurrency startups, hence its nickname of Crypto Valley. The Swiss authorities have traditionally been very welcoming to the fledgling industry, and a new report has suggested amending financial laws to encourage more blockchain acceptance and innovation.
Existing Laws ‘Well Suited’ to Blockchain
The Swiss Federal Council’s report, entitled ‘Legal Framework for Distributed Ledger Technology and Blockchain in Switzerland’, was released last week following a meeting earlier in the month. During this meeting blockchain technology was analyzed in accordance with existing financial laws. Switzerland’s existing laws were, the group stated, “well suited” to dealing with new technologies such as blockchain, but adjustments could be made to allow for greater harmony and encourage the integration of distributed ledger technology into existing infrastructure. The report reinforces what is already understood by many in the blockchain space in terms of the country’s ambitions, with the council stating that they wished to “exploit the opportunities offered by digitalization for Switzerland.”
Creating a New Legal Framework
One of the key elements of the report involved the mention of “selective adjustments” to existing laws in order to create an environment where Switzerland can “establish itself and evolve as a leading, innovative and sustainable location for fintech and blockchain companies.” What form these adjustments will take has yet to be determined, but the council has instructed two key departments, the Federal Department of Finance and the Federal Department of Justice and Police, to work together to form a new framework for blockchain. This new framework will include devising a “new and flexible authorization category for blockchain-based financial market infrastructures” that will encourage innovation, while at the same time tackling money laundering and terrorism financing concerns attached to the use of cryptocurrency.
With many commentators predicting the downfall of cryptocurrencies, Switzerland is clearly betting heavily on blockchain’s future and putting itself in a great position to benefit should it continue its fast track to mainstream adoption.