On 1 December 2021, the state bank of the Swiss Canton of Berne (Kantonalbank) opened a digital market place for tokenized assets. The market place called "SME|X" is targeted at small and medium sized enterprises and is based on the blockchain technology. The offering in-cludes the whole process from the issuing of shares, to storage, trading and settlement of tokenized assets. For small and medium sized enterprises, this offering opens up a new way to attract investments. For investors, a new liquid investment category in small and medium sized enterprises in Switzerland becomes more easily accessible.

The move of the Berne Cantonal Bank follows earlier projects such as the market place for digital assets operated by Taurus under the name of TDX since spring 2021 together with a group of banks or the Swiss Digital Exchange SDX operated by the leading Swiss exchange group SIX. SDX received its license from the Swiss Supervisory Authority FINMA to operate a stock exchange and a central securities depositary for digital assets in Switzerland on 10 Sep-tember 2021.

With the new developments, there are now several trading platforms in Switzerland offering integrated trading, settlement and custody infrastructure for digital assets. Furthermore, there are reports that international cryptocurrency exchanges such as the Seychelles-incorporated BitMEX are interested to open offices in Switzerland in 2022.

However, until today, none of these new players has yet applied for a DLT trading system as available under the new Swiss DLT Act since 1 August 2021. This in spite of the fact that FIN-MA even published a guideline for applications for such a license already on 2 August 2021. The DLT trading system would allow a multilateral trading of DLT securities (Swiss and foreign security tokens) and other digital assets. Contrary to a traditional stock exchange, a DLT trad-ing system would allow an integrated system to trade, store and settle transaction with DLT-based assets. Under the general laws on exchanges, these functions have to be performed by different, segregated companies. Furthermore, retail clients could directly trade on the DLT trading system; again, in case of traditional exchanges, trading has to be through brokers or banks. However, the clearing function will still need to be performed by a separate entity, un-less settlement takes place immediately. Compared to other token trading places, a DLT trad-ing system would permit trade in security tokens and even storage of tokens, including pay-ment tokens, which is usually only permitted to banks and (for settlement purposes) brokers. Contrary to the envisaged EU regulations, the Swiss approach is to have more uniform rules for tokens, even if they are financial instruments.

This significant build-up of the Swiss token trading infrastructure is further supported by initia-tives of the Swiss Ecosystem such as the Swiss Blockchain Federation, an association of var-ious companies, interest groups and cantons, to support a build-up of the Swiss blockchain infrastructure. The Swiss Blockchain Federation updated its Circular 2019/01 on tokenized equi-ty and published the revised version on 22 November 2021. This Circular provides guidelines for issuers of equity tokens under Swiss law with the aim to establish best practices for securi-ty tokens. It discusses various governance issues about voting rights, board and management compensation, data protection, administrative privileges etc. and provides some basic infor-mation about the obligation to publish a prospectus under Swiss law. Furthermore, in its Annex 1, it provides a template for an investor memorandum should no prospectus under Swiss law be required.

Now that the new Swiss DLT Act has become fully effective in 2021, the accelerating build-up of trading infrastructure for tokens and further clarifications on the new act through industry guidelines such as the one of the Swiss Blockchain Federation will help to secure a reliable business, legal and regulatory environment in Switzerland for the further expansion of the DLT ecosystem.

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