Regulation
Cryptocurrency Regulation in Switzerland 2024
Switzerland, known for its strong economy and breathtaking landscapes, is also a major player in the world of financial technology. The country has embraced cryptocurrency and has become one of the most crypto-friendly places in Europe. Since 2016, Switzerland has created a supportive environment for blockchain and cryptocurrency businesses, making it a key destination for these industries. The country’s regulatory framework is unique and helps facilitate the use of cryptocurrencies for financial transactions.
We explore how Switzerland’s approach to cryptocurrency regulation sets a global standard for growth and stability.
1. Overview of cryptocurrency regulation in Switzerland
In Switzerland, cryptocurrencies are considered an asset class and are regulated by the Swiss Financial Market Supervisory Authority (FINMA). FINMA is responsible for issuing four types of crypto licenses: fintech, exchange, investment fund, and banking. It ensures that companies comply with the country’s anti-money laundering law. New guidelines were recently introduced to strengthen the regulation of cryptocurrency exchanges and digital asset services, based on the recommendations of the Financial Action Task Force (FATF). Switzerland has attracted over 1,000 blockchain and crypto companies, and a key development in this area has been the introduction of the “Blockchain Act.”
1.1. Swiss Blockchain Law: What is it?
The ‘Swiss Blockchain Act’ includes updated laws that provide detailed legal regulations for blockchain-based businesses. It improves investor protection by distinguishing cryptocurrencies and provides more legal clarity in situations such as bankruptcy. The act also maintains the Swiss principle of technology neutrality and introduces a new license category for trading systems based on Distributed Ledger Technology. It also clarifies how cryptocurrencies are taxed.
1.2. Swiss Crypto Valley: Does it Exist?
You may have heard that Switzerland is home to many cryptocurrency leaders. Is that true? The story of Zug, often called the Swiss Crypto Valley, will convince you.
Zug has become a major hub for cryptocurrency businesses since Johann Gevers moved Monetas there in 2013. The term “Crypto Valley” was first used in 2014 by Mihai Alisie during discussions at the Ethereum Foundation. By 2017, Zug had attracted over 40 cryptocurrency foundations. Local government support, including easier registration processes, acceptance of Bitcoin for services, and assistance with visa applications, has contributed to this success. Zug’s success is due to a combination of business-friendly laws, a strategic location, and favorable tax rates.
2. Cryptocurrency Regulation in Switzerland: What’s New
December 11, 2023: Lugano has started accepting Bitcoin and Tether for municipal payments.
January 23, 2024: FINMA has approved a retail trading platform for tokenized securities and digital assets. It has extended Taurus’ TDX platform to retail investors.
February 20, 2024: Geneva-based Tyr Capital Partners has been raided by Swiss prosecutors over allegations of mismanagement.
May 16, 2024: The Swiss Federal Council has proposed the adoption of the Crypto-Asset Reporting Framework (CARF) for improved tax transparency.
May 30, 2024: At the London Blockchain Conference, the Swiss Metaverse Association unveiled its Regulatory Position Paper. It advocated for positive regulation of the global metaverse.
3. Cryptocurrency Taxation in Switzerland
In Switzerland, cryptocurrencies are considered assets rather than legal tender like the Swiss franc (CHF). Here’s a look at the relevant taxes:
Capital Gains Tax: Private investors typically pay no tax on profits from cryptocurrency holdings and sales. However, commercial traders and businesses where cryptocurrency trading is a primary source of income must pay capital gains tax (CGT) of up to 7.8%, plus around 10% for old age and survivors’ insurance.
Property tax: Cryptocurrencies are subject to wealth tax if the total value of your assets exceeds the personal exemption limit as of December 31.
Income tax: Income from cryptocurrencies, such as wages, payments, mining, staking or airdrops, is taxed. These incomes are converted into Swiss francs upon receipt and the progressive federal, cantonal and municipal tax rates apply. The rates vary based on location and income level.
4. Cryptocurrency Mining in Switzerland: Key Points
Cryptocurrency mining is allowed in Switzerland, but the way it is categorized can vary by region. In Bern and Zurich, mining is considered self-employment, while Lucerne and Zug prefer to evaluate mining activities individually. Depending on how it is classified, mining could be considered a hobby, self-employment, or a business, which will impact the tax implications accordingly.
5. Timeline of cryptocurrency regulation in Switzerland
2013: Johann Gevers moved his cryptocurrency startup Monetas to Zug. This marked the birth of Crypto Valley.
2014: Zurich has installed the country’s first Bitcoin ATM.
2016: Switzerland has begun to promote cryptocurrencies for financial payments. Zug has accepted Bitcoin payments for council services.
2016: The FATF has recognized the Swiss AMLA framework for the prevention of illicit financing.
2018: The Swiss Minister of Economy has revealed his goal of positioning Switzerland as a “Crypto Nation”.
2018: FINMA has published the ICO Guidelines that adapt financial laws to cryptocurrencies. The guidelines cover banking, securities, trading and investments.
2019: FINMA’s ICO guidelines have clarified the regulatory position on stablecoins.
2020: The Swiss Parliament has approved a holistic regulation for blockchain companies.
2021: The Blockchain Act has been enacted, providing a legal basis for cryptocurrency trading.
2021: FINMA has approved the first crypto fund, the Crypto Market Index Fund.
2023: FATF’s improved rules for cryptocurrency supervision have come into force.
Final note
Switzerland is a world leader in cryptocurrency regulation, setting a high standard for other countries to follow. Its innovative regulatory framework shows how financial technology can drive economic growth. The country’s ongoing updates to its cryptocurrency regulations highlight its commitment to advancing the digital finance industry. Switzerland’s approach demonstrates how positive and forward-thinking regulation can create a user-friendly, safe, and secure crypto environment.
Switzerland continues to play a leading role and be the leading example of effective regulation.