It’s been more than a decade, but Cryptocurrencies continue to remain largely unregulated throughout the globe. There is hardly any nation that hasn’t researched cryptocurrencies, but only a few have taken the necessary steps to regulate it.
Being one of the global crypto hotspots, Switzerland is among those nations that have taken several measures to foster the growth of the underlying crypto-economy with its crypto-friendly laws. The regulators are now encouraging blockchain startups in Switzerland with new laws.
The National Council, the lower house of the Federal Assembly of Switzerland, has passed a legislative package on June 17, which amends a bunch of financial laws to remove legal barriers that might otherwise block the implementation of blockchain and distributed ledger technology.
The amendments were mostly based on a Federal council proposal filed in 2019 and are now being passed onto the upper chamber for a final vote.
While ICOs have faded, Switzerland’s enthusiasm for blockchain technology has not.
On this matter, Rolf H. Weber, professor of financial market law and chair of the working group for regulatory issues at the Swiss Blockchain Federation, notes:
“It’s known that Switzerland is very much trying to encourage blockchain business. It’s a political objective.”
Weber also revealed that once the news laws come into play, security token holders will be allowed to freely register and transfer their assets on the blockchain. As of now, all transfer of security tokens is done in writing and the new legislation will make things easier and more seamless.
Furthermore, blockchain service providers will also be allowed to provide their services without any kind of legal complications. Alongside this, changes made to the bankruptcy laws will allow token owners to appeal in court to be able to reclaim their assets.
There are also eight provisions outlining how blockchain service providers and crypto trading platforms can obtain a license from the financial authority.
Weber added that these new laws would greatly broaden the existing framework related to crypto and blockchain and will improve the conditions for crypto asset owners and providers.
“You may say this is a ‘blockchain law’ because all changes relate to blockchain business models. But in contrast to a few other countries like Malta or the Principality of Liechtenstein, Switzerland is not going to implement blockchain law in a narrow sense,” Weber added.
About the taxation laws, the National Council did not amend the existing laws to include special considerations for blockchain technology.
The nation already has a crypto-friendly taxation system that exempts bitcoin mining from Value Added Tax (VAT), while specific security tokens are exempt from withholding tax with no capital gains tax on investments.
However, the nation has a withholding tax placed on dividends earned from traditional securities such as bonds or shares. According to Joel Weibel from the Swiss Federal Tax Administration, this tax also applies to “shares in tokenized form” to ensure all investors are treated equally.
To clarify the tax divide between security tokens and traditional securities, Luzuis Meisser, founder of Bitcoin Association Switzerland noted that the market for security tokens is still small, and imposing heavy taxes could hinder the growth of the new economy.
“This is very good news for the crypto space because it means less taxes at least for now,” Luzius added.