Swiss Blockchain Federation Seeks Clarity On Federal Council’s Stablecoin Reforms

• The Swiss Blockchain Federation has recently posted its comments centering on the proposed revisions in the Financial Institutions Act to help boost the stablecoin ecosystem.

The Swiss Blockchain Federation (SBF) published on Tuesday its position paper on the Federal Council’s decision to revise the Financial Institutions Act (FINIG). The group highlighted that the measure will foster a competitive environment for stablecoins in Switzerland. However, some of its provisions need further clarity and refinement.

Additionally, SBF claimed that Switzerland has already lost much of its initial edge in innovative financial technologies. Hence, it emphasized that the FINIG package is the key to revitalizing its momentum.

Key Revisions Under the FINIG Package

The FINIG package introduces the following changes based on the government’s public consultation in October:

ADVERTISEMENT* FINIG will become a licensing authority for payment institutions

• Establishment of a new legal framework for stablecoins
• Collective custody of crypto assets and additional services will be covered under a new license for crypto businesses
• Alignment of crypto services with the due diligence and transparency requirements present in traditional financial service providers and public offerings

Swiss Blockchain Federation Identifies Issues in the FINIG Revisions

Heinz Tännler, President of the SBF, stated that the FINIG overhaul demonstrates the Federal Council’s commitment to addressing challenges in the digital financial market. But then again, he noted that it should have “consistent guardrails and a clear vision” to ensure effective execution of its goals.

The SBF’s position paper outlined, among other measures, strengthening consumer protection for fintech startups, beginning with the removal of caps on public deposits. Meanwhile, it warned against overreach beyond the usual prudential regulation and anti-money-laundering rules.

Moreover, the SBF praised the Federal Council’s proposal to allow stablecoin issuance in Switzerland. On the other hand, it urged the government to enforce equal treatment for all stablecoins, as having preferential treatment for some may impede innovation. Likewise, it doesn’t see the need for banks to be allowed to issue only stablecoins through separate payment institutions, as such a procedure lacks a sound rationale given banks’ central role in payments.

ADVERTISEMENTFurthermore, the Federation pushed for a tiered regulatory system based on institutional significance, with the Financial Market Supervisory Authority’s (FINMA) direct supervision applying only to “large and systematically important institutions.” Recognized supervisory organizations, as is the case for asset managers, should handle smaller digital asset service providers.

Lastly, SBF requested the Federal Council to enhance FINMA’s licensing procedures, as they have become too slow and opaque in today’s digital-centric systems. It asked the government to render licensing decisions in no more than six months upon the applicant’s submission of all requirements.

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