Switzerland was long considered a pioneer of the blockchain revolution, thanks to its clear legal framework and business-friendly policies. But that lead is shrinking. With new rules addressing the suboptimal FinTech license and stablecoins, the Federal Council now aims to close existing gaps.
Since Trump took office and classified digital assets as a national priority, the United States has been advancing crypto regulation at full speed. Legislative drafts and executive orders created clear rules for token issuers, exchanges, service providers, and stablecoins within months. The latter have become one of the fastest-growing segments of the market, with a market capitalization exceeding USD 310 billion and transaction volumes on par with Visa and Mastercard. In Switzerland, by contrast, a FINMA supervisory notice has effectively resulted in a stablecoin ban. After more than a year of stagnation, the Federal Council is finally responding, as stated in a press release.
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Switzerland needs clear stablecoin regulation
Stablecoins are cryptocurrencies pegged to assets such as the US dollar. The business is enormous and earned market leader Tether more than USD 10 billion in net profit in 2024. In Switzerland, however, issuing such tokens remains unattractive. According to FINMA guidelines, issuers must obtain a banking license and identify all holders through a KYC process. While obtaining a banking license is expensive but theoretically possible, the second requirement demands whitelisting of all users - a condition that would, in practice, immediately disqualify a stablecoin.
Under pressure from the industry and international competition, the Federal Council now acknowledges this shortcoming and is opening consultations on an amendment to the Financial Institutions Act. The aim of the proposal is to improve the framework for market development, location attractiveness, and the integration of innovative financial technologies into the existing financial system.
"The new regulation is intended to enhance the attractiveness of Switzerland as an economic and financial center for innovative and technology-driven business models, while ensuring a strong competitive position compared to other major financial hubs. With this proposal, Switzerland is also implementing international standards." - Federal Council press release
New licensing categories for crypto institutions
Specifically, the Federal Council proposes two new licensing categories. The new definition of “payment institutions” replaces the previous “FinTech license.” Targeted adjustments have been made to improve attractiveness and customer protection. Client funds should, in the event of bankruptcy, be segregated and thus excluded from the insolvency estate. In addition, the previous limit of 100 million Swiss francs for client deposits will be lifted, allowing these institutions to grow and benefit from economies of scale. Payment institutions will be allowed to issue a special form of stablecoin under specific conditions. At the same time, anti-money-laundering due diligence obligations for stablecoin issuance will be further clarified.
Additionally, the Federal Council is introducing a new licensing category for “crypto institutions.” These entities will provide various cryptocurrency-related services. The licensing and operational requirements will be modeled after those for securities firms but will be less comprehensive, as crypto institutions do not engage in transactions involving financial instruments. Crypto institutions and other crypto service providers will also have to meet certain requirements to avoid conflicts of interest.
Too little, too late?
The Federal Council’s consultation is the first step before parliamentary review and will run until February 6, 2026. This will be followed by parliamentary deliberation, a possible referendum, and implementation. The entire process will take at least six months and could extend over several years. In the fast-moving crypto industry, that’s an eternity. If Switzerland wants to maintain its position as a leading blockchain hub, it must now lay the groundwork for future developments. Lawmakers need to move from a reactive to a proactive stance. Switzerland once gained its lead through courage - and could now lose it through hesitation.
