Swiss Government Developing Legal Framework for Digital Currency

The Swiss government has said that it is developing a legal framework for digital currencies, in response to a growing need for legal certainty among banks, businesses and consumers.

Describing its approach to developing the framework as ‘swift’, the Swiss Federal Council, effectively the country’s head of state, revealed it is making significant progress toward introducing a regulatory environment that is supportive of the needs of its fledgling fintech industries.

The move follows initial attempts to introduce a supportive legal environment, which were passed into law earlier this month and are expected to come into force in August.

Now, with a raft of new initiatives under consideration, the regulatory picture for digital currencies could soon be set to receive similar treatment.

One initiative that has been launched today is a regulatory sandbox, a testing ground for fintech development and digital currency businesses without the regulatory restrictions of testing in live environments.

The threshold for the sandbox has been set at one million francs, with firms accepting less than this amount now exempt from regulation, with their depositors exempt from state protection of their funds.

While the Federal Council has committed to bring forward regulation of digital currencies as quickly as possible, there remains some uncertainty as to the shape and form these provisions are likely to take.

"The Federal Council will continue to closely follow further developments in the areas of digitalization and fintech, and examine further regulatory measures. The corresponding work, i.e. on clarifying the legal qualification of virtual currencies, has been taken over and is to be swiftly pursued."

Depending on the outcome of this push for regulation, both startups and businesses accepting currencies like bitcoin are set to be impacted by the result, and organizations across the country and beyond will be keen to see more from the Federal Council in due course.

Switzerland has been at the forefront of the development of digital currency and blockchain businesses, with an impressive startup scene coalescing around the technology.

It remains to be seen whether the drive for regulation will help improve the environment for startups still further by fostering innovation and encouraging development efforts in and around digital currencies.