As CI reported earlier today, the Swiss Federal Council published a report last week that advocated on behalf of greater integration of blockchain, or distributed ledger technology (DLT), into their financial services industry.
The Federal Council is made up of seven members, each of which heads a government department. The Federal Council is the highest executive authority in Switzerland.
Switzerland is already a prominent jurisdiction for blockchain innovation and initial coin offerings (ICOs). This prominence has been aided by a largely supportive public sector and a robust entrepreneurial environment.
In the wake of the Swiss report, CI has received several comments from industry insiders including the Chair of the Crypto Valley Association (CVA) Policy and Regulatory Working Group, Dr. Mattia Rattaggi.
Rattagi said the CVA welcomes the report and is “entirely in tune with its goal to create the best possible framework conditions for Crypto Nation Switzerland,” while maintaining Switzerland’s integrity and reputation as a global financial center:
“It is positive that this is to be achieved through targeted adjustments to the existing legal framework – instead of issuing completely new laws,” said Rattaggi. “We feel that this approach best represents the principle of technological neutrality and is in line with the position taken by the CVA in the consultation process. Crucially, this approach ensures maximum consistency within the current legal framework while keeping it principle-based and flexible, while allowing changes to be adopted on a ‘need-to-regulate’ basis.”
“These are attributes that have been fundamental in the Crypto Valley’s emergence as a global hub of blockchain innovation,” added Rattagi. “With the CVA Policy and Regulatory Working Group, we look forward to analysing the details of the report, communicating its contents and implications to our Membership and to continued cooperation with government stakeholders to keep building the wider Crypto Valley ecosystem.”
Angel Versetti, Co-Founder & CEO of Ambrosus – a blockchain and IoT platform for quality assurance in food and pharmaceutical supply chains, called the report an “important step in moving the entire blockchain industry towards formal recognition” and adoption. The statement adds legal clarity to the emerging ecosystem while telling the public it is still in its infancy.
“For the broader cryptocurrency community, this report puts forward a cautious approach to regulating digital currencies and tokens,” Versetti said. “Within the context of innovation and the impending digital revolution, the report is significant insofar as it indicates a larger social and political shift in favor of decentralization, transparency, and increased efficiency via blockchain technology.”
Versetti said it was important to note that blockchain is not just beneficial for financial services. Innovation and decentralization will be reduced if excessive regulations and bureaucracy are entered into the blockchain sector. Without mentioning any country names, Versetti believes this is already happening in other jurisdictions. These jurisdictions will only favor banks, lawyers and other financial intermediaries.
Versetti said that Switzerland should only regulate blockchain companies that do business with retail customers rather than targeting firms that are building decentralized protocols.
“In a nutshell, they should take a laissez-faire approach, whereby there are general freedoms and rights guaranteed, and companies are regulated reactively and not proactively. Those are fundamentally different approaches. One permits innovation while eradicating fraud, while the other will only benefit the banks and intermediaries that blockchain was supposed to replace in the first place.”
Versetti is concerned that Switzerland, right now, seems to favor the digital asset management sector which is mainly the “old financial elites from the largest corporate banks and investment banks. ”
“They tend to recreate the same barriers that currently exist in the financial sector, which is worrying.”
Brent Jaciow, Head of Blockchain Affairs at Utopia Music, said that for new tech to gain traction people need to know the rules.
“Switzerland allowing changes to be adopted on a ‘need-to-regulate’ basis is not a large shift from the current situation,” said Jaciow. He believes Swiss regulatory bodies will be “more proactive in providing guidance to new technologies.”
“Mandating FINMA to be more relaxed and use more discretion towards crypto companies is a very welcome step indeed. However, reaffirming protection of rights and interests of crypto companies would be even better.”