For years, Switzerland has been at the forefront of the blockchain revolution thanks to a progressive legal framework and business-friendly policies. However, its lead over other jurisdictions is shrinking. The Federal Council now aims to address two shortcomings: the FinTech license and stablecoin regulations.
Switzerland positioned itself early as a leading crypto jurisdiction by creating a regulatory environment that balances innovation and investor protection while leveraging its reputation for financial stability and data privacy. The introduction of Distributed Ledger Technology (DLT) legislation in 2021 was a milestone, providing legal clarity for blockchain-based assets for the first time globally. This proactive approach solidified Switzerland’s "Crypto Valley" in Zug as a hub for blockchain innovation. However, as policymakers now acknowledge, the country’s lead is eroding.
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Crypto Valley losing momentum
To quantify the loss of momentum, industry representatives often refer to the Henley Crypto Adoption Index 2024. In 2023, Switzerland ranked second globally, but just a year later, the small nation at the heart of Europe had dropped nine places to rank eleventh. While the index's methodology can be criticized, concerns about Swiss policy and the financial market regulator FINMA have undeniably increased. The main points of contention include the sluggish issuance of the FinTech license (also known as the "light banking license") and strict regulations on stablecoin issuance.
The latter can be seen as a de facto ban on stablecoin issuance, as CVJ.CH criticized upon the release of new FINMA guidelines. Stablecoins are cryptocurrencies designed to maintain a fixed peg to an asset like the U.S. dollar. This is a massive business-market leader Tether generated over $10 billion in net profit in 2024. However, due to FINMA's supervisory notice issued in summer 2024, issuing stablecoins in Switzerland is no longer competitive. Issuers now require an expensive banking license and must conduct KYC verification on all stablecoin holders-a nearly insurmountable hurdle.
Federal Council urged to act
Policymakers have recognized these shortcomings. In December 2024, SVP National Councilor Benjamin Fischer submitted a parliamentary motion urging the Federal Council to review the FinTech license and stablecoin regulations. The goal is to evaluate how Switzerland can regain its competitive edge. The Federal Council’s recently published response indicates a willingness to address these issues.
First, the Federal Council emphasizes that Switzerland remains a leader in the sector. The Swiss legal framework is still considered a benchmark. Additionally, the country offers very attractive general conditions, such as political stability and a highly educated workforce. However, other countries have not remained idle and have since adapted their legal frameworks, closing the gap in terms of competitiveness. According to the Federal Council, Switzerland’s conditions have not deteriorated per se; rather, other countries have caught up in the blockchain sector.
Nevertheless, the Federal Council acknowledges the criticism. The State Secretariat for International Finance (SIF) is currently drafting legislative amendments to specifically adapt Swiss financial market regulations. The primary goal is to revise the FinTech license for payment service providers and establish a more favorable legal framework for stablecoin issuance. The proposed legislation aims to balance innovation with financial sector integrity and stability, according to the Federal Council.
Industry representatives express satisfaction
The Swiss Blockchain Federation (SBF), one of Switzerland’s leading blockchain industry associations, welcomes the Federal Council’s positive signals, as stated in a press release. The SBF sees the Federal Council’s response as an important step in maintaining Switzerland’s position as a global blockchain hub in the future. A constructive dialogue between policymakers, authorities, and the industry is crucial in this regard. The association actively contributes to this process-whether through its political group, which includes nine National and Council of States members as well as five government councilors, through the foundational work of its numerous working groups, or through its expertise in collaborating with authorities.
"The Federal Council’s response demonstrates Switzerland’s ambition to maintain a leading role in a rapidly evolving global environment. We are convinced that through close collaboration between industry, policymakers, academia, and authorities, we can create the framework conditions that continue to foster innovation, enable new services and companies, and ultimately create jobs." - Heinz Tännler, President of the Swiss Blockchain Federation and Finance Director of Zug
