Tokenization is reshaping the financial landscape. Switzerland’s tokenization regulations are putting Swizz companies at the forefront of this transformation. By embracing blockchain technology, Switzerland offers a secure and innovative environment for digital assets.
Switzerland’s tokenization regulations
The DLT Act
The Distributed Ledger Technology (DLT) Act is the cornerstone of Switzerland’s support for tokenization. This law, effective from 2021, integrates blockchain into Swiss law. It adapts various federal laws, ensuring comprehensive legal assurance for crypto assets and custodians.
Key Provisions of the DLT Act
1. Ledger-Based Securities: The DLT Act introduces ledger-based securities, allowing the tokenization of shares, bonds, and other financial instruments. These securities provide the same legal protection as traditional securities. Once ownership rights are transferred via blockchain, they cannot be manipulated, ensuring transparency and security.
2. DLT Trading Facilities: The act creates DLT trading facilities, which are blockchain-based trading systems. These facilities handle trading, clearing, settlement, and custody of DLT securities. This innovation opens markets to both financial institutions and individual investors.
3. Custody and Segregation of Assets: The DLT Act ensures that crypto assets can be segregated from other assets. This protection is crucial in the event of a custodian’s default, providing legal certainty for companies using blockchain.
4. Regulatory Clarity: The Swiss Financial Market Supervisory Authority (FINMA) offers clear guidelines on token classification and regulation. This includes payment tokens, utility tokens, investment tokens, and hybrid tokens. This classification ensures appropriate regulation based on the token’s function.
Additional Legal Developments
1. Code of Obligations Amendments: In February 2021, amendments to the Code of Obligations included ledger-based rights. Tokenized assets are now legally recognized alongside certificated and uncertificated securities. This marks a significant step towards digital transformation.
2. Anti-Money Laundering (AML) Compliance: The DLT Act extends AML regulations to DLT trading facilities. This ensures that crypto transactions meet stringent AML standards, preventing illegal activities.
Case Studies: Implementation of Tokenization
1. SEBA Bank: SEBA Bank issued Series B equity shares as Ethereum ERC-20 tokens. This move highlights how traditional financial institutions can enhance liquidity and accessibility through blockchain technology.
2. Sygnum Bank: Sygnum tokenized premium investible wines. This broadened investment opportunities for clients, showcasing the versatility of tokenization in creating fractional ownership of high-value assets.
3. Aktionariat: Aktionariat facilitates the tokenization of company shares, offering innovative solutions that democratize access to equity markets.
Conclusion
Switzerland’s tokenization regulations are comprehensive and forward-thinking. By integrating blockchain technology, Switzerland ensures transparency, security, and legal certainty for tokenized assets. This supportive environment fosters innovation, positioning Switzerland as a global leader in the digital economy.