Swiss DLT Act and Blockchain Framework Switzerland's pioneering DLT Act creates comprehensive legal certainty for blockchain-based assets, establishing frameworks for DLT securities, custody, and trading facilities.
Effective August 2021
Source: State Secretariat for International Finance (SIF)

What Is the Swiss DLT Act?

The Swiss DLT Act (formally the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology) represents one of the world's first comprehensive legal frameworks for blockchain-based assets. Effective since August 2021, it amended multiple Swiss laws to accommodate digital assets.

Switzerland's approach is notable for being technology-neutral—rather than creating entirely new regulations, the DLT Act integrates blockchain assets into existing Swiss financial law, providing legal certainty while maintaining regulatory consistency.

What Are DLT Securities?

The DLT Act introduces a new category of securities registered on distributed ledgers:

Definition

  • Rights registered on a distributed ledger (blockchain)
  • Holder can assert and transfer rights only through the ledger
  • Registration agreements govern the rights
  • Treated equivalently to traditional certificated securities

Eligible Rights

  • Claims (debt instruments, loans)
  • Membership rights (equity, participation rights)
  • Property rights (in certain circumstances)
  • Other rights previously requiring physical certificates

Legal Effects

  • Transfer on blockchain is legally binding
  • Good faith acquisition protection for holders
  • Rights travel with the token
  • No parallel paper certificates needed

How Does the DLT Act Address Custody?

The act establishes clear rules for crypto-asset custody and insolvency protection:

Segregation Requirements

  • Crypto-assets must be segregated from custodian's own assets
  • Clear records of client holdings required
  • Segregation protects clients in custodian insolvency
  • Third-party claims cannot attach to client assets

Insolvency Protection

  • Crypto-assets excluded from custodian's bankruptcy estate
  • Clients can claim their assets directly
  • No pro-rata sharing with other creditors
  • Reduces counterparty risk for institutional holders

Operational Requirements

  • Intention to hold for third parties must be clear
  • Proper allocation to individual clients
  • Technical and organizational measures for security
  • Record-keeping and audit trail requirements

What Are DLT Trading Facilities?

The DLT Act creates a new license category for blockchain-based exchanges:

License Scope

  • Multilateral trading of DLT securities
  • Custody services for traded assets
  • Settlement and clearing on the ledger
  • Registration services for DLT securities

Participant Access

  • Can admit non-regulated participants (unlike traditional exchanges)
  • Retail access possible under certain conditions
  • AML/CFT requirements apply to all participants
  • Threshold-based rules for participant onboarding

Regulatory Framework

  • FINMA authorization required
  • Capital and organizational requirements
  • Trading rules and market surveillance
  • Disclosure and transparency obligations

How Does Switzerland Treat Stablecoins?

Swiss law applies existing categories to stablecoins based on their characteristics:

Payment Tokens

  • Tokens used primarily as payment means
  • Subject to AML/CFT requirements
  • May require banking license if deposit-like
  • FINMA guidance on classification

Deposit Classification

  • Stablecoins backed by issuer promise may be deposits
  • Deposit-taking requires banking license
  • Exemptions available for certain structures
  • E-money regulations may apply

FINMA Guidance

  • Case-by-case assessment of stablecoin structures
  • Focus on economic substance over form
  • Regulatory sandbox for innovation testing
  • Fintech license for limited deposit-taking

What Is FINMA's Role?

Supervisory Approach

  • Technology-neutral, substance-over-form regulation
  • Proportionate supervision based on risk
  • Active engagement with industry
  • Published guidance on crypto-asset classification

Authorization Process

  • Clear application procedures for crypto businesses
  • No-action letters for regulatory certainty
  • Fintech license for lower-risk activities
  • Full banking/securities dealer licenses available

AML/CFT Requirements

  • FATF-compliant framework
  • Travel Rule implementation
  • Customer due diligence for crypto transactions
  • Suspicious activity reporting obligations

What Should Financial Institutions Consider?

Strategic Advantages

  • Legal certainty for tokenized assets
  • Clear custody and segregation rules
  • Access to sophisticated financial infrastructure
  • Reputation as credible financial center

Operational Requirements

  • Swiss presence may be required for certain activities
  • FINMA authorization for regulated services
  • Compliance with Swiss AML/CFT standards
  • Local substance and governance

Cross-Border Considerations

  • Switzerland not EU member—no MiCA passporting
  • Equivalence assessments with EU pending
  • Swiss-EU bilateral relations affect market access
  • Dual licensing may be required for EU activities

The Coinbax Perspective

Switzerland's DLT Act demonstrates how existing legal frameworks can adapt to accommodate blockchain technology. Rather than creating an entirely new regulatory category, Switzerland integrated DLT securities into its well-established financial law—providing legal certainty while maintaining regulatory consistency.

The custody rules are particularly significant: clear segregation requirements and insolvency protection address core institutional concerns about holding digital assets. This legal clarity enables banks and asset managers to offer crypto custody with confidence about client asset protection.

For financial institutions, Switzerland offers a credible jurisdiction with sophisticated infrastructure and regulatory expertise. However, its position outside the EU means careful consideration of cross-border implications—Swiss authorization doesn't provide EU market access, requiring separate MiCA compliance for European operations.

Frequently Asked Questions

What is the relationship between Swiss regulation and MiCA?

Switzerland is not an EU member and therefore not subject to MiCA. Swiss-authorized firms cannot passport into the EU. Equivalence discussions are ongoing, but firms seeking EU market access need separate MiCA authorization.

Do I need a banking license to issue stablecoins in Switzerland?

It depends on the stablecoin's structure. If holders have a redemption claim against the issuer (deposit-like), a banking license or fintech license may be required. Asset-backed structures without direct claims may have different treatment.

What is a DLT trading facility?

A DLT trading facility is a FINMA-licensed platform that can offer multilateral trading of DLT securities, along with custody, settlement, and potentially registration services. It's designed to enable integrated blockchain-based financial market infrastructure.

How are client crypto-assets protected in insolvency?

Under the DLT Act, properly segregated crypto-assets are excluded from a custodian's bankruptcy estate. Clients can claim their assets directly rather than becoming unsecured creditors—a significant protection for institutional holders.