Switzerland’s Federal Council – a seven-member group that serves as the country’s head of government – began consulting amendments to the country’s Banking Act and Banking Ordinance when it comes to financial technology on the 1st of February. The goal is to reduce market entry barriers for Fintech firms, and to enhance the Swiss financial center’s competitiveness.
The country’s Federal Council had in the past outlined its Fintech-friendly agenda, in which the Federal Department of Finance (FDF) was instructed to prepare a consolation draft that would make it easier for Fintech companies to enter and invest in the country. The consultation initiated by the Federal Council will last until the 8th of May, 2017.
In order to attract the likes of bitcoin and blockchain-startups and embrace the Fintech industry, the Federal Council is proposing a form of deregulation with three elements. These will require amendments to the country’s Banking Ordinance and Banking Act:
- Setting a 2-month deadline for holding money in settlement accounts, a type of account commonly used in crowdfunding services. Until now, these had a mere seven-day deadline, and the increase means main transactions are easily organized and foreseeable.
- Creating a “sandbox” that the Federal Council describes as an ‘innovation area’, where Fintech firms can accept up to CHF 1 million (roughly $1.01 million) that won’t be classified as operating on a commercial basis, which can be exempt from authorization.
- Simplifying authorization and operation requirements relative to the current banking license in certain areas, with a deposit protection for companies that accept public funds up to CHF 100 million (approx. $101 million) but do not operate in the lending business. Less stringent requirements in areas such as minimum capital would also have to be regulated.
Switzerland is becoming a Fintech hub
By attracting Fintech firms and embracing the industry, Switzerland aims to improve the quality of its financial center and boost its competitiveness. The country has, in the past, stated that with bitcoin it would be sending a message to the world: that it wants to be in the forefront of future technologies.
The Federal Council noted Fintech is rapidly evolving and, as such, some business models may require future regulatory adjustments:
Due to the rapidly progressing digitisation in the financial sector, in particular in the blockchain area, it can be assumed that business models will develop which are not yet conceivable today. The Federal Council will follow these developments closely also in the future and will swiftly propose the necessary regulatory adjustments if required
The country’s Fintech-friendly approach was also reinstated late last month, when bitcoin startup Xapo gained an early “conditional approach” to operate in Switzerland.
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