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Swiss Government Considers New Regulatory Sandbox For Blockchain Startups

The Swiss government has announced its intention to develop a new regulatory sandbox, designed to encourage fintech startups, including blockchain developers, to work within the Swiss framework.

The Swiss Federal Council, which is made up of representatives from the seven Swiss agencies of government, announced that it would be consulting stakeholders on the possible development of a new regulatory infrastructure, with a view to support blockchain development and other fintech companies as they develop and expand new technologies.

The move signals growing interest in the Swiss government around the potential applications for the blockchain, the distributed ledger technology underpinning digital currencies like Bitcoin. It mirrors similar levels of interest from the financial sector globally, including central banks, as well as a number of other government agencies around the world.

The government’s plans would see firms dealing in volumes of less than one million francs subject to alternative compliance rules, with the potential for a new licensing regime to be introduced for companies within this space.

It is hoped that the sandbox would reduce the compliance cost and regulatory barriers facing developers, as they continue to pursue new opportunities in the blockchain.

A spokesperson for the council said that while plans are underway, it remains poised to respond to changes in this industry, as the core technologies continue to develop and advance.

"Due to the rapidly progressing digitization 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 announcement will be welcomed by those startups already operating within Switzerland, as well as fintech and blockchain companies from further afield.

It comes at a time when governments and regulators worldwide are investigating alternative mechanisms for regulating blockchain startups, to encourage innovation and remove the technical obstacles facing these new businesses.

Switzerland is already home to a number of blockchain startups, including Xapo, as well as to a number of firms from other industries that are pursuing blockchain solutions. As the new regulatory regime is put out to consultation, many more may be hoping for a legal framework that makes it easier to develop and test new technologies with the blockchain.