Regulatory relaxations for Fintech companies in Switzerland
In November 2016, the Swiss Federal Council published its Fintech strategy, focusing on promoting innovative forms of financial services. In the meanwhile, certain measures have already entered into force. These are the 3 main features of the strategy:
Measure 1: Prolonged Settlement Period
The Banking Ordinance (Art. 5 para. 3 lit. c) has been amended to allow a prolonged period of 60 days for the acceptance of funds for settlement purposes without the need for a banking license. This measure provides more room to maneuver, especially for crowdfunding platforms and similar service providers which are exempt from the requirement to get a banking license for their services. The amendment of the Banking Ordinance entered into force on August 1, 2017.
Measure 2: Sandbox
A sandbox for new market participants has been created by exempting financial institutions accepting public funds up to CHF 1 million from the banking license requirement. With this measure, startups should be encouraged to test their business model without being subject to burdensome regulatory restrictions. Again, this deregulation entered into force on August 1, 2017.
Measure 3: Banking License Light
Companies that accept funds up to a maximum of CHF 100 million without executing any lending business will be subject to simplified authorization and operating requirements compared to the current banking license (e.g. in the areas of accounting, auditing, minimum capital, own funds and liquidity requirements as well as deposit protection). The so-called banking license light entails an amendment of the Banking Act. Accordingly, the parliament will have a vote on it. Therefore, this change will take some more time.
Overall, these measures should lead to a facilitated market entry for startups in the Fintech area, especially for crowdfunding companies. It is important to mention that the Swiss anti-money laundering rules apply regardless of any new relaxations. Furthermore, it remains to be seen whether additional measures will be introduced in areas such as roboadvisory or distributed ledger technology such as Bitcoin. These are not directly targeted by the latest regulatory changes. With this legal framework, however, Switzerland belongs to the first countries where Fintech companies are actively encouraged to enter into the market by granting them significant regulatory relaxations.
MarcoToniAttorney at law Partner
Marco Toni is a partner of our office in Zurich. He focuses on domestic and international M&A transactions, private equity, corporate governance and general corporate, stock exchange and capital markets laws.T: +41 43 434 67 15 M: +41 79 557 62 15 E: firstname.lastname@example.org