Cryptocurrency Legislation in Switzerland: 2024 Overview

Switzerland’s stance towards cryptocurrency and blockchain technology as of 2024 is highly progressive and encouraging. The Swiss federal government and the Swiss Financial Market Supervisory Authority (FINMA) recognize the potential that blockchain and distributed ledger technology (DLT) offer to various sectors of the economy. This positive attitude extends to the tokenization of securities and the broader use of DLT​​.

Swiss law does not specifically define cryptocurrencies or virtual currencies. However, the revised Federal Ordinance on Banks and Savings Institutions classifies crypto-based assets as either a payment instrument for acquiring goods and services or a means for money or value transfers​​. Despite this, cryptocurrencies are not considered legal tender in Switzerland. They are not “money” in the traditional sense, but some legal scholars argue that they may be regarded as “money” in a broader sense if widely used and accepted by the public​​.

The DLT Law in Switzerland introduced “DLT-Securities,” allowing for the tokenization of rights, claims, and financial instruments, such as bonds, shares, structured products, or derivatives. This law provides a legal framework for electronically registering rights with the same protection as a traditional security. However, cryptocurrencies that do not represent a claim against an issuer cannot be issued as DLT-Securities under this law​​.

While cryptocurrency-related activities are not prohibited in Switzerland, there is no comprehensive tailor-made regulation specifically for cryptocurrencies. The trading and offering of cryptocurrencies are not subject to specific Swiss sales regulations, but the status of tokens as securities is determined on a case-by-case basis, following FINMA’s guidelines​​​​.

In 2021, FINMA approved the “Crypto Market Index Fund,” the first Swiss fund investing primarily in crypto-based assets. This fund qualifies as an investment fund under Swiss law and is categorized as “other funds for alternative investments” with particular risks​​.

For tax purposes, cryptocurrencies must be converted into Swiss francs. The Federal Tax Administration provides year-end conversion rates for certain cryptocurrencies, and these are considered assets, comparable to bank deposits, thereby subject to wealth taxes. Capital gains on cryptocurrencies are generally exempt from income tax for individuals, unless held as part of business assets. Legal entities must declare cryptocurrencies in their tax assessment and are subject to corporate income tax on any net taxable earnings from the sale of cryptocurrencies​​.

Cryptocurrencies are also considered in value-added tax (VAT) matters and are treated similarly to legal tender. The trading or exchange activities of cryptocurrencies and related services are exempt from VAT​​.

Regarding anti-money laundering (AML) regulations, issuing cryptocurrencies and their subsequent trading may be subject to AML regulations. The Swiss Anti-Money Laundering Act (AMLA) applies to financial intermediaries, and activities that constitute financial intermediation are considered under this act. FINMA clarifies that issuing cryptocurrencies like payment tokens and stablecoins constitutes financial intermediation​​​​.

In summary, Switzerland’s approach in 2024 continues to be one of embracing technological innovation in the financial sector, especially in the areas of cryptocurrencies and blockchain. The country’s regulatory framework is adaptive and fosters a conducive environment for the growth and development of these digital assets, while ensuring necessary oversight and compliance with international standards.