Connect with us

Influencers

Swiss Government advocates for decentralized financial transaction laws: Industry insiders react

Tony Zerucha

Published

on

On Friday, the Swiss government released a report which advocated for the inclusion of decentralized financial transactions in Swiss law. It is the latest move from a country which has positioned itself to be among blockchain’s global leaders. Yes technology moves much faster than legal systems can adapt, but initiatives such as Switzerland’s can help narrow the gap.

Why is it important to ensure laws are updated to reflect modern technology? What will be the effect of countries allowing changes to be adopted on a “need to regulate” basis? Three industry experts share their thoughts.

Brent Jaciow, head of blockchain affairs at Utopia Music, a blockchain-powered music tracking and attribution platform based in Zug, Switzerland:

“In order for any new technology to gain mass adoption, people must know what regulatory framework they are operating under. While for early adopters a loose understanding may be all that is necessary, for institutions and the population en masse, it is crucial to understand the regulatory implications of owning, transacting and working with new technologies especially as it relates to securities.

“Switzerland allowing changes to be adopted on a ‘need-to-regulate’ basis is not a large shift from the current situation, where governments must direct their focus to the most pressing needs of their citizens. Though, this is also positive as it means that governments and their regulatory bodies will be more proactive in providing guidance to new technologies. By being proactive, it will speed up the adoption cycle as new entrants do not need to be concerned with dealing with future or retroactive regulation and can just move forward with using and innovating with these new technologies.”

Dr. Mattia Rattaggi, chair of the Crypto Valley Association (CVA) Policy and Regulatory Working Group:

“The CVA welcomes the release of the Federal Council’s report, and is entirely in tune with its goal to create the best possible framework conditions for ‘Crypto Nation Switzerland’ while underlining the country’s integrity and reputation as a financial centre and business location.

“It is positive that this is to be achieved through targeted adjustments to the existing legal framework – instead of issuing completely new laws. 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.

“To a large extent, the report also confirms what we, in the Crypto Valley community, have known for some time — that Switzerland’s regulatory system is already open and relatively flexible. These are attributes that have been fundamental in the Crypto Valley’s emergence as a global hub of blockchain innovation.

“With the CVA Policy and Regulatory Working Group, we look forward to analyzing 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 and CEO of Ambrosus a blockchain and IoT platform for quality assurance in food and pharmaceutical supply chains:

“The most recent Swiss Government report concerning the regulatory approach to blockchain technologies is an important step in moving the entire blockchain industry towards formal recognition and industrial adoption, and provides increased legal clarity. Notably, the report is keen to emphasize the innovative value of blockchain-based ecosystems, while also reminding the public of the infancy of the industry as a whole. For the broader cryptocurrency community, this report puts forward a cautious approach to regulating digital currencies and tokens. 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.

“At the same time, it is important to not simply apply securities, banking, and money transmission laws to cryptocurrencies and blockchain, as has been done frequently in Switzerland over the past year. It is important not to stifle innovation and decentralization with excessive regulations, red tape and bureaucracy, because this will reduce the democratic value proposition that blockchain offers and will only favor bankers, compliance lawyers, and financial intermediaries, which is already happening in most jurisdictions that are taking too strong an approach to regulation. As entrepreneurs in general —and crypto enthusiasts in particular — treasure privacy, decentralization, and freedom from censorship, these values should likewise be reflected in the rules and regulations.

“In addition, Switzerland should consider only regulating companies that do business with retail customers, and instead treat decentralized protocols as a common good, rather than trying to excessively regulate and impose rules on companies working on 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. Right now, Switzerland seems to favor the digital asset management industry, which almost exclusively consists of the same 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.

“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.”

Tony Zerucha

Tony Zerucha is an alternative finance journalist with more than seven years experience in the space. The author of more than 1,000 articles, Tony was named LendIt's 2018 Journalist of the Year.

Continue Reading

Latest

Companies