DLT Act: National Council approves adjustments to federal law
The National Council discussed the Federal Council's proposal to amend a total of ten existing federal laws in civil and financial market law (DLT Act) as the first Council. The Federal Council's proposal was adopted by the National Council (with a few amendments) by 192:0 votes.
"The National Council's unanimous approval of the bill is a commitment by Switzerland to blockchain technology that is hard to beat in terms of clarity."
The framework law aims to improve the legal framework for the application of distributed ledger technology (DLT). Among the most important innovations is the introduction of register book-entry securities (book-entry securities that are issued on the basis of a DLT system and fulfil all the functions of a security). This completes the digitalisation of Swiss securities law. Furthermore, the DLT Act improves the protection of crypto-assets in the insolvency of a custodian as well as the introduction of the so-called DLT trading system, which allows trading and custody with DLT effects as well as the settlement of corresponding transactions. This will make it possible in Switzerland to also admit so-called security tokens to trading on a regulated trading venue. The regulatory requirements are based on those for multilateral trading facilities (MTFs), but there is the possibility to provide for facilitations for so-called small trading facilities - whose trading or custody volume does not exceed certain thresholds to be determined by the Federal Council.
One of the changes to the Federal Council's proposal is an amendment to the Financial Services Act (FIDLEG). Accordingly, financial service providers that provide financial services exclusively to institutional or professional clients do not have to join an ombudsman's office (Art. 77 FIDLEG). This adjustment was justified with the relief of small DLT systems, but generally applies to financial service providers under the FIDLEG.
The National Council's unanimous approval of the bill is a commitment by Switzerland to blockchain technology that is hard to beat in terms of clarity. Although individual parliamentary group spokespersons were critical of the alleged potential for abuse of certain applications or the environmental impact of this technology, they ultimately voted unanimously in favour of the bill. The broad support for the conception of the bill as a framework law and the rejection of a blockchain law based on the Liechtenstein model should also be emphasised.
The bill will only go to the preliminary advisory committee of the Council of States and will probably be dealt with by it in the autumn session. Finance Minister Maurer's forecast that the DLT Act could enter into force as early as the beginning of 2021 may nevertheless be overly optimistic in view of the three-month referendum period. In contrast, entry into force by mid-2021 is realistic.
For further information in the area of blockchain/DLT law, please contact Dr Hans Kuhn or Sebastian Wälti directly.