Switzerland, according to its Federal Council report, classifies cryptocurrency as a “digital representation of a value which can be traded on the Internet but not accepted as legal tender anywhere”. Therefore, Switzerland regards cryptocurrency as assets (property), and cryptocurrency and related exchanges are legal in Switzerland, subject to regulations.

There are currently no cryptocurrency-specific regulations in relation to trading and offering in Switzerland, but cryptocurrency remains subjected to relevant existing regulations such as tax, money laundering and securities regulation.

Recognizing the barriers of the existing regulatory framework to new financial technology such as cryptocurrency, regulatory amendments were made by the Switzerland government to create “regulatory sandbox” in support of the development of such technology.

Overall, Switzerland is one of the countries that adopts a progressive approach towards cryptocurrency and its blockchain technology, and has relaxed its regulatory framework to balance the technological development and protection of the public from the associated risks.

Securities in Switzerland is governed by the Swiss Financial Market Supervisory Authority (“FINMA”) under the Financial Market Infrastructure Act (“FMIA”).

FMIA defines securities as “standardised certificated or uncertificated securities, derivatives and intermediated securities which are suitable for mass standardised trading, meaning they are publicly offered for sale to more than 20 investors”.

Essentially, assets that represent debt or equity claim on the issuer with investment purposes are securities. Accordingly, whether a cryptocurrency is deemed as securities depends on its categorization as a Payment Token, Utility Token, or Asset Token as per guidelines published by FINMA:

  1. Payment Tokens are tokens which are intended to be used, now or in the future, as a means of payment for acquiring goods or services or as a means of money or value transfer. Payment Tokens give rise to no claims on their issuer. Examples include Bitcoin and Ether which FINMA does not perceive as securities.
  2. Utility Tokens are tokens which sole purpose is intended to provide access digitally to an application or service by means of a blockchain-based…