Answer ... Switzerland has no specific fintech regulations. A technology-neutral approach has been adopted, meaning that the same rules apply to all businesses, whether they are using traditional or innovative technologies. Frequently, fintech companies offer services and develop technologies without themselves being subject to financial market laws. However, this requires examination on a case-by-case basis. The relevant federal acts include:
- the Banking Act;
- the Collective Investment Schemes Act;
- the Stock Exchange Act;
- the Anti-money Laundering Act;
- the Financial Market Infrastructure and Market Conduct in Securities and Derivatives Trading Act;
- the Financial Market Supervision Act; and
- the Consumer Credit Act.
These acts have been implemented through ordinances enacted by the Federal Council and the regulator, the Financial Market Supervisory Authority (FINMA), which has issued further guidance. In addition, self-regulation may apply.
Although the financial market laws may not apply directly to fintech companies, they may apply by contractual agreement with a financial institution (eg, outsourcing regulations).
Answer ... Switzerland has no fintech-specific regulations. A technology-neutral approach has been adopted, meaning that the same rules apply to all businesses, whether they are using traditional or innovative technologies. The Swiss government closely monitors new technological developments and the potential need for regulatory adjustments in order to reduce unnecessary administrative burdens.
As a result, the Federal Council introduced a sandbox exemption, which is available to all companies. Under the sandbox exemption, the acceptance of public deposits of up to CHF 1 million will no longer trigger a licence requirement under the Banking Act (subject to the fulfilment of certain conditions). Further, the exemption from the licence requirement under the Banking Act for pure payment service providers which accept deposits for settlement purposes only has been expanded. On 1 April 2019 the sandbox was extended to include consumer loans. Consumer loans provided through the intermediation of crowd-lending platforms are subject to the Consumer Credit Act.
Further, as of 1 January 2019, a new licence category (fintech licence) is available for companies that accept deposits from third parties up to a maximum amount of CHF 100 million without granting loans or paying interest on the deposits. Facilitated conditions apply to such a licence. The most important points in this regard include:
- substantially reduced minimum capital requirements;
- an exemption from the requirements regarding the equity capital, risk diversification and liquidity of banks;
- an exemption from the deposit guarantee; and
- reduced accounting and auditing requirements.
Answer ... FINMA is responsible for enforcing the fintech regulatory framework. It has a broad range of supervisory and enforcement powers at its disposal. It can conduct audits or arrange for them to be carried out by licensed audit companies or audit agents. It can take precautionary measures and, in case of violation of the supervisory provisions by a supervised entity or person, must implement any measures necessary to restore compliance with the law.
Further, if FINMA detects a serious violation of the supervisory provisions, it may:
- issue a declaratory ruling;
- prohibit the person responsible from acting in a management capacity at any supervised entity;
- publish its supervisory rulings; and
- confiscate any profits that a supervised person or entity or a person in a management position has made.
FINMA must revoke the licence of a supervised person or entity if it no longer fulfils the requirements for such activities or has seriously violated the supervisory provisions.
In addition to these competences, FINMA has certain regulatory powers, which it exercises by issuing ordinances based on the financial markets legislation and circulars on the application of the financial markets laws.
Answer ... Switzerland takes a liberal and business-orientated approach to regulatory policy for fintech products and services. It has initiated various consultation processes and legislative changes to allow the fintech industry to grow and embed its products and services in the existing business environment. The Swiss regulators have recognised that the law was orientated towards big financial institutions, whose start-up requirements could not be met by smaller enterprises due their lack of capacity (eg, net asset requirements).
FINMA, which is responsible for the implementation of the fintech regulatory framework, is seeking to maintain and enhance Switzerland’s status as an innovative and competitive financial centre. In its regulations it has therefore adopted an essentially neutral approach to certain business models and technologies.
Answer ... Yes. Some trade associations support fintech start-ups in general (eg, Swiss Finance Start-ups, www.swissfinancestartups.com/); others focus on specific areas, such as blockchain (eg, the Swiss Blockchain Federation, https://blockchainfederation.ch/).