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How are the following key technologies in the fintech space regulated and what specific legal issues are associated with each? (a) Internet (e-commerce); (b) Mobile (m-commerce); (c) Big data (mining); (d) Cloud computing; (e) Artificial intelligence; and (f) Distributed ledger technology (Blockchain, cryptocurrencies)
Answer ...

(a) Internet (e-commerce)

There are no specific internet-related regulations in the fintech space.

(b) Mobile (m-commerce)

There are no specific mobile-related regulations in the fintech space.

(c) Big data (mining)

There are no specific big data-related regulations in the fintech space.

(d) Cloud computing

There are no specific cloud computing regulations in the fintech space. In cloud computing, the main regulatory issues concern data protection and cybersecurity. When cloud services are used to store client information, the Data Protection Act applies. Certain financial institutions such as banks and securities dealers must comply with additional regulations aimed at protecting client data. For example, banks must uphold banking secrecy and take certain technical, organisational and contractual security measures to protect client information. FINMA has specified the requirements for the handling of electronic client data by banks and securities dealers in its circular on operational risks and outsourcing. Further, the Swiss Bankers Association has issued non-binding guidelines for the implementation of secure cloud computing services compliant with the law.

(e) Artificial intelligence

There are no artificial intelligence-related regulations in the fintech space.

(f) Distributed ledger technology (Blockchain, cryptocurrencies)

On 16 February 2018 FINMA published an initial coin offering (ICO) guideline, which sets out how it intends to apply the financial markets legislation in handling enquiries from ICO organisers. FINMA focuses on the commercial function and purpose of the tokens issued by the ICO organiser in assessing ICOs and categorises tokens into three types: payment tokens, utility tokens and asset tokens. Many tokens are hybrid tokens that fall within more than one category.

On 22 March 2019 the Federal Council submitted a draft bill proposing several legislative amendments to improve the framework conditions for blockchain and distributive ledger technology (DLT) for consultation. The bill proposes the following adjustments, among others:

  • in the Code of Obligations, the introduction of the possibility to electronically register value rights, thereby guaranteeing the functions of negotiable securities;
  • in the Debt Enforcement and Bankruptcy Act, the express regulation of the segregation of crypto-based assets in case of bankruptcy; and
  • in the Financial Market Infrastructure Act, the inclusion of a licence requirement for so-called ‘DLT trading facilities’.

The consultation process concluded in June 2019. The results have not yet been published.

For more information about this answer please contact: Jana Essebier from Vischer AG