Last week, Switzerland cleared the way for free trading of Bitcoin and other crypto coins in the country by announcing creation of a new digital stock exchange arm. The SIX Stock Exchange said its new SIX or SDX digital exchange now allows investors through regulated institutions to trade, settle and store digital tokens through a single venue, under the "highest Swiss standards of supervision and regulation." As a historic global financial hub, Switzerland is well-known for being a large gold miner and refiner. But the new digital gold, Bitcoin and crypto, has been making waves there in recent years. Currently, Switzerland is home to more than 900 blockchain and cryptocurrency businesses, due to Swiss crypto laws being positive to DLT and forward-thinking. Switzerland Crypto Regulations Key Takeaways:
  • Zug residents pay taxes in crypto
  • Cryptocurrency banks & exchanges are legal
  • Strict AML, KYC & CFT requirements
  • Cryptocurrencies are legal tender in some cases
  • Closely aligned with the FATF
  • FINMA & SFTA oversee crypto asset activities
Swiss regulator FINMA wrote on its website: “FINMA recognises the innovative potential of new technologies for the financial markets. In order to facilitate serious innovation, it applies the existing provisions of financial market law in a consistently technology-neutral way, i.e. in keeping with the “same risks, same rules ”principle.” FINMA also said it needs to balance innovation with market security and that it has now “simplified the tightly coupled value chain, from issuing and trading to settling and storing tokenized assets.” In the statement, FINMA also said that it "issued two approvals to operate financial market infrastructures based on so-called Distributed Ledger Technology (DLT). Specifically, FINMA has authorized SIX Digital Exchange AG to act as a central securities depository and the associated company SDX Trading AG to act as a stock exchange." In the first half of the year, 40 exchange-traded products (ETPs) collateralized by cryptocurrencies were launched on the Swiss stock exchange, including the world’s first ETPs to be based on the cryptocurrencies Cardano, Stellar, Polkadot and Solana. Crypto products with a total value of around CHF 4.8 billion (around $5.2 billion) have already been traded since the start of the year. This represents an increase of more than 300% compared to the whole of the previous year. Pic. 1. The Swiss Performance Index is a total rate of return index of 300+ stocks issued by Swiss companies whose shares are traded on the Electronic Bourse System. Switzerland has been known as being one of the world’s leading and most competitive financial hubs. The country while managing to safekeep its own currency, Swiss Franc, which is ironically the only frank remaining after France joined eurozone in 1999, remains meticulously faithful and discreet in a reasonable distancing from both Europe and the U.S. and sticking to its own finance development doctrine combining the traditional Swiss strengths of stability, security and trust with a legendary openness to new innovations in Fintech and so-called Sustainable Finance. It’s amazing to find out that the crypto market development happened to become one of its components. The decision accurately comes after the memorable El Salvador’s President Nayib Bukele’s approval of Bitcoin as legal tender in that country highlighting that the country already purchased its first 400 Bitcoins and promised to buy “a lot more” coins to its coffers as he announced El Salvador to become the first nation to adopt Bitcoin as legal tender. In the same fashion Ukraine's President Volodymyr Zelensky said he is planning to make Bitcoin legal tender by the start of 2023, according to Professor Vyacheslav Evgenyev. Ukraine's government has already instructed ministers to transform the country into a crypto-friendly nation. Switzerland has long aspired at becoming a hub for products and markets developing around cryptocurrencies and other digital assets. Some of its banks offer Bitcoin trading and storage, and part of the country, dubbed the Crypto Valley, is a hub for crypto finance companies and startups. SIX, the Swiss Stock Exchange, is Europe’s 3rd-largest stock exchange and one the industry’s most-respected post-trade providers. FINMA said it has granted SIX two licenses as a stock exchange and a central securities depository. The licenses allow its infrastructure to be opened up to controlled financial institutions, rather than directly to end customers, which was one option, according to Finma. SIX has been working on a digital exchange since 2018. Executives involved in the project said they see Switzerland's approval as a cornerstone to building a global digital asset trading network. SIX is also working on a similar platform in Singapore. SIX did not say when the SDX will clear all formalities to launch de-facto in Switzerland, but executives said it will be ready to go as soon as Finma's approval is received.The new Swiss digital exchange will use distributed ledger technology to record transactions.