ZURICH (Reuters) - Switzerland’s cabinet proposed new light-touch regulations for financial technology (fintech) companies on Wednesday aimed at bolstering business and competitiveness.
Easing rules could help reduce barriers to market entry and provide more legal certainty for the burgeoning sector, said the finance ministry, which must now turn the changes into draft legislation.
Ministry officials said draft legislation could be sent to parliament by mid-2017 after a public consultation.
“We assume that with the steps we have prepared and the commitment we have to the overall financial services industry we can provide a solution that puts us among the top (countries) in the world that regulate this,” Finance Minister Ueli Maurer told a news conference in Bern.
He said the measures sent a signal that Switzerland will quickly create good conditions for fintech companies, thus fostering innovation and preserving financial sector jobs.
Switzerland lags the likes of Britain and Singapore when it comes to fintech. Firms specializing in crypto currencies, for instance, say financial regulations must change for them to thrive in places like Zug, dubbed “Crypto Valley”.
Many crypto currency companies are subject to banking regulations as they are classed as deposit-taking firms, meaning they need 10 million Swiss francs ($10.3 million) in paid-up capital once their business grows above a certain level.
To address these concerns, the cabinet proposed a three-pronged strategy:
- Setting a deadline of 60 days for holding money in settlement accounts, facilitating crowd funding services
- Creating a “sandbox” innovation area in which a provider can accept from the public funds of up to 1 million francs without being monitored by industry watchdog FINMA
- Establishing a new fintech license, granted by FINMA, for institutions which are restricted to taking deposits of up to 100 million francs and do not operate in the lending business. These would be exempt from traditional depositor protection systems. The minimum capital should amount to 5 percent of the accepted public funds, but no less than 300,000 francs.
Officials said matters still to be decided include establishing the legal status of virtual assets and regulating the use of blockchain technology — in which a network of computers verifies and updates a record of transactions through a system derived from virtual currency bitcoin.
Reporting by Michael Shields; editing by Jason Neely