Category Archives: Regulatory

Signing Documents in Times of Covid-19

A modern interpretation of the writing requirements under the Swiss Code
of Obligations

By Christiana Fountoulakis (Reference: CapLaw-2020-16)

An Introduction to the New Rules for Digital Assets

New rules for digital assets have been proposed by the Federal Council in its Dispatch to the Parliament of 27 November 2019 in Switzerland. This contribution provides a brief overview of the big picture, the key legal amendments related to distributed ledger technology, as well as the latest adjustments to the draft of the DLT-Rules of 27 November 2019 in comparison to the Preliminary Draft of 22 March 2019. Further, the impact of the new rules on market participants is discussed.

By Luca Bianchi (Reference: CapLaw-2020-01)

DLT Draft Law – Civil Law Aspects

A cornerstone of the DLT Draft Law aims at improving legal certainty in connection with the issuance and transfer of tokenized rights and financial instruments, such as bonds and shares. To that effect, the DLT Draft Law provides for the introduction of a new concept of so-called uncertificated register securities (Registerwertrechte) and specific rules in the Code of Obligations for corporations looking to issue shares in tokenized form.

By Stefan Kramer / Urs Meier (Reference: CapLaw-2020-02)

DLT Draft Law – Insolvency Law Aspects

One key element of the DLT Draft Law concerns the question of how crypto-based assets are treated in bankruptcy. When it comes to storing such assets there are basically two options: either the owner of the crypto-based assets stores the tokens him/herself, or the tokens are stored by a third party custodian. Under current Swiss law, it is not clear whether crypto-based assets held by a custodian on behalf of a client will be segregated in bankruptcy. The DLT Draft Law therefore proposes to introduce a new insolvency regime that will allow for such segregation.

By Benedikt Maurenbrecher / Urs Meier (Reference: CapLaw-2020-03)

Conflicts of Laws on the Distributed Ledger and Negotiable Instruments

The Bill on the Federal Act on the Adaptation of Federal Law to Developments of the Distributed Ledgers Technology of 27 November 2019 (the “DLT Bill“) which was sent to parliament addresses among other issues the question of conflicts of laws related to rights recorded on a distributed ledger. Considering the ubiquity of the potential users of a distributed ledger and the difficulty to localize a distributed ledger, which does not present a strong nexus to any given place, this is an absolute necessity. This article aims to present the principles of the amendments to the PILA that are being proposed by the DLT Bill.

By Rashid Bahar (Reference: CapLaw-2020-04)

Central Securities Depositaries in the Age of Tokenized Securities

The distributed ledger technology offers a new way to transfer securities and record their ownership. When fully deployed, it could form the backbone of a new market infrastructure, and could even replace central securities depositaries as we know them today. The Federal Council however raised the possibility that certain distributed ledger infrastructures could be themselves qualified as central securities depositaries. This article reviews cases where the rules on central securities depositaries could apply in a distributed ledger technology context, and describes how the topic is addressed in the proposed Federal Act on Adapting Federal Law to the Developments of the Distributed Ledger Technology.

By Jacques Iffland / Ariel Ben Hattar (Reference: CapLaw-2020-05)

New Delegation Rules under FinSA/FinIA as well as CISA: Impact on supervised and non-supervised entities

The purpose of this article is to provide a first analysis of the key features and challenges, which will result from the shift from the current delegation rules under CISA to the new regulations on “delegation” pursuant to FinSA, FinIA and CISA. The new regulatory framework concerning the transfer of tasks to third parties covers a variety of factual and operational circumstances and set-ups. One of the main particularities of the new framework is that it is untested for the newly prudentially supervised entities under FinIA (i.e. trustees and asset managers) and that it will, at least in part, wherever financial services are provided, also impact non-supervised entities. The new rules may have consequences for both Swiss institutions delegating financial services and other tasks and international service providers with whom Swiss financial institutions will conclude delegation schemes.

By François Rayroux (Reference: CapLaw-2019-40)

New Limited Qualified Investor Fund (L-QIF) – Innovation and Deregulation as Growth Catalyst for the Fund and Asset Management Industry in Switzerland

The Federal Council aims to boost the attractiveness of Switzerland as a domicile for fund production with the proposed introduction of the Limited Qualified Investor Fund (L-QIF). The ongoing consultation period for the L-QIF was initiated on 26 June 2019 and will end on 17 October 2019. The L-QIF is an innovative financial product that may invest in all thinkable investments and will benefit from very flexible investment restrictions. To speed up time-to-market and reduce costs, the L-QIF will neither require a regulatory authorization or product approval nor will it be subject to ongoing supervision by the Swiss Financial Market Supervisory Authority FINMA. 

By Sandro Abegglen / Luca Bianchi (Reference: CapLaw-2019-41)

FINMA Grants Banking Licenses to New Swiss Crypto Banks, Introduces New Strict AML Rules regarding Payments on Blockchain

On 26 August 2019, the Swiss financial regulator FINMA granted full banking and securities dealer licenses to two new financial institutions focusing on services in the area of crypto currencies and other digital assets. At the same time, FINMA issued new guidance on its interpretation of Swiss anti-money laundering regulation in respect of digital token transfers. The practice adopted by FINMA is very strict, especially in the light of international standards, and will challenge regulated financial services providers, new and old alike, intending to offer services regarding digital assets.

By Daniel Flühmann / Rashid Bahar (Reference: CapLaw-2019-42)

Swiss Financial Market Supervisory Authority Publishes New Guidelines for “Stable Coins”

Against the backdrop of the growing number of projects for so-called “stable coins” since mid-2018, the Swiss Financial Market Supervisory Authority (FINMA) on 11 September 2019 published new guidelines explaining the regulatory qualification of tokens that are linked to underlying assets such as fiat currency, commodities or securities with the goal to minimise fluctuations in their market value. The new guidelines supplement FINMA’s ICO Guidelines of 16 February 2018, which continue to apply. While the stable coin guidelines are general in nature, their publication coincides with the recent announcement by the Swiss based Libra Association to launch a payment token that is backed by a basket of fiat currencies, a project that has attracted worldwide attention by governments and regulators.

By Martin Peyer / Gadi Winter (Reference: CapLaw-2019-43)