Swiss Government Establishing 'Crypto-Bank' As New Category Of Financial Institution And Creating New FinTech Company License

On, November 2, 2016, during its weekly meeting, the Swiss Federal Council (the Council), the executive council which serves as the collective executive head of the government of Switzerland, requested an easing of the Swiss regulatory framework for providers of innovative financial technologies (FinTech). The Council stated that it desires forward thinking comprehensive solutions for the emerging FinTech industry and is thus recommending an approach with three elements: (1) provisions regarding holding money in settlement accounts, which is helpful to crowdfunding services; (2) a regulatory FinTech innovation sandbox, which would include the current money laundering provisions but otherwise would not (yet) require monitoring by the Swiss Financial Market Supervisory Authority (FINMA); and (3) a new fintech license granted by FINMA, for institutions restricted to the deposit-taking business (acceptance of public funds) and thus not operating in the lending business, allowing less stringent regulatory requirements to apply rather than heavier regulatory burdens imposed on classical banks, including lower capital requirements.

The Council has instructed the Swiss Federal Department of Finance (FDF) to draw up a consultation draft with the required legislative amendments by the start of 2017. The Council also requested that the FDF cooperate with interested authorities on further reducing the various barriers to market entry for FinTech firms, including those outside financial market regulation (e.g., legal treatment of virtual currencies and digital assets). The Swiss Finance Minister, Ueli Maurer, indicated to Reuters that the government's hope is that the country's supportive regulatory stance will encourage further innovative companies to join the blockchain startups already located in Switzerland: "We assume that with the steps we have prepared and the commitment we have to the overall financial services industry we can provide a solution that puts us among the top (countries) in the world that regulate this."1

FINMA also recently released redefined corporate governance guidelines for Swiss banks.2 It is proposing to streamline the banking regulatory framework by defining the revised requirements in terms of underlying principles and removing detailed application...