The Federal Council (FC) published a strategy paper that outlines a “three-step plan” to adjust the current financial regulatory framework in Switzerland to the business reality of the fintech industry. These are the 3 main measures.
Measure 1: Prolonged Settlement Period
The Swiss Federal Council initiated in February 2017 a public consultation on three deregulation measures. The Banking Ordinance (Art. 5 para. 3 lit. c) will be amended to allow a prolonged period of 60 days for the acceptance of funds for settlement purposes without the need for a banking license. This measure will provide more room to maneuver, especially for crowdfunding platforms and similar service providers which will be exempt from the requirement to get a banking license for their services. For the amendment of the Banking Ordinance a decision by the Federal Council is needed only. Therefore, it can be realized within short time, probably by the end of 2017.
Measure 2: Sandbox
A sandbox for new market participants will be created by exempting financial institutions accepting public funds up to CHF 1 million from the banking license requirement. With this measure, startups should be encouraged to test their business model without being subject to burdensome regulatory restrictions. Again, this deregulation takes place on the level of the Banking Ordinance and may be implemented within a few months.
Measure 3: Banking License Light
Companies that accept funds up to a maximum of CHF 100 million without executing any lending business will be subject to simplified authorization and operating requirements compared to the current banking license (e.g. in the areas of accounting, auditing, minimum capital, own funds and liquidity requirements as well as deposit protection). The so-called banking license light entails an amendment of the Banking Act. Accordingly, the parliament will have a vote on it. Therefore, this change will take some more time.
Status strategy: Public consultation
The three pillar strategy of the Federal Council is currently subject to public consultation. It will be closed on May 8, 2017. After review of the responses, the Federal Council will announce the next steps.
Overall, these measures should lead to a facilitated market entry for startups in the Fintech area, especially for crowdfunding companies. It is important to mention that the Swiss anti-money laundering rules apply regardless of any new relaxations. Furthermore, it remains to be seen whether additional measures will be introduced in areas such as roboadvisory or distributed ledger technology such as Bitcoin. These are not directly targeted by the regulatory changes currently foreseen. With these proposals, however, Switzerland belongs to the first countries where Fintech companies are actively encouraged to enter into the market by granting them significant regulatory relaxations.
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