The Swiss State Secretariat for International Finance (SIF) adopted a new report titled Legal Framework for Distributed Ledger Technology and Blockchain in Switzerland.
It shows the organisation’s interest in assisting Switzerland in developing and improving laws concerning new technologies, specifically blockchain innovation and distributed ledger technology.
Switzerland To be The New Safe Haven for Blockchain?
The report covers the potential of blockchain technology in the country while also highlighting its “remarkable and potentially promising developments… for innovation and enhanced security.”
The report had a very positive tone, but it also pointed out a lack of regulatory framework regarding blockchain and other related technologies.
It also covered some of the major uses of DLT and blockchain in an international environment. Moreover, it also discussed the problems related to the use of technology, especially in the financial market, due to a lack of legal framework.
The report provided tips on the same:
- The country should pursue a technology-neutral and principle-based regulatory and legislative approach.
Policymakers should prepare a framework that helps promote innovation.
- The country should make adjustments related to blockchain and DLT apps.
- The authorities should be willing to learn and accept new technologies.
- The country should work on improving its image and present itself as a friendly location for blockchain and DLT companies.
The report also highlights the need to utilise the benefits of blockchain and other similar technologies. The organisation seems very interested in bringing blockchain businesses to the country:
“[The Federal Council] wants to create the best possible framework conditions so that Switzerland can establish itself and evolve as a leading, innovative and sustainable location for fintech and blockchain companies.”
What is the Goal?
The main goal is to help the local blockchain industry which appears to be presently struggling. The organisation aims to use a “bottom-up approach” to help the industry grow.
According to the report, the organisation intends to use the laissez-faire approach to help the market. It leaves decision-making in the hand of the market. This helps build more faith in the industry and gives it a more optimistic look.
The report said:
“The preferences of the market and society should decide which technologies prevail, while policy should ensure optimal and innovation-friendly framework conditions.”
The Need for a Regulatory Framework
The report highlights the need for a new framework also due to the presence of threats such as money launderers:
“This paradigm shift (i.e. the shift from centralised to decentralised structures) also poses major challenges for the regulator[s]. The same aims will apply in decentralised structures as in centrally organised financial markets.”
What the Report Concludes
While the report includes a complete examination of the Swiss Criminal Code, it shies away from predicting the future. It gives the power in the hands of intermediaries including police and financial organisation:
“Financial intermediaries must observe duties of due diligence to prevent money laundering and terrorist financing, as well as duties in the event of a suspicion of money laundering. Due diligence duties [include] clarifying the type and purpose of the business relationship.”
Switzerland has been working on improving the industry for a while now, but it couldn’t achieve its goals. However, with now the hopes of a better framework, things may soon change for the better.