Regulation
Cryptocurrency Regulations in Switzerland 2024
Switzerland, known for its strong economy and stunning landscapes, is also a major player in the world of fintech. The country has embraced cryptocurrency and has become one of the most favorable places for this practice in Europe. Since 2016, Switzerland has created a favorable environment for blockchain and cryptocurrency companies, 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.
Let’s 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 bank. It ensures that companies comply with the country’s anti-money laundering law. Recently, new guidelines were introduced to strengthen the regulation of cryptocurrency exchanges and digital asset services, based on recommendations from the Financial Action Task Force (FATF). Switzerland has attracted more than 1,000 blockchain and cryptocurrency companies, and the introduction of the “Blockchain Act” was a major step forward in this area.
1.1. The Swiss Blockchain Act: 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 between crypto assets and provides more legal clarity in situations such as bankruptcy. The law also maintains the Swiss principle of technology neutrality and introduces a new license category for trading systems based on distributed ledger technology. In addition, it clarifies how crypto assets are taxed.
1.2. The Swiss Crypto Valley: does it exist?
You may have heard that Switzerland is home to many cryptocurrency leaders. Is this true? The story of Zug, often called the Swiss Crypto Valley, will convince you.
Zug has become a major hub for cryptocurrency companies since Johann Gevers moved Monetas there in 2013. The term “Crypto Valley” was first used in 2014 by Mihai Alisie during discussions about the Ethereum Foundation. By 2017, Zug had attracted over 40 cryptocurrency foundations. Support from the local government, including easier registration processes, acceptance of Bitcoin for services, and assistance with visa applications, have contributed to this success. Zug’s success is due to a combination of business-friendly laws, a strategic geographic location, and favorable tax rates.
2. Regulation of cryptocurrencies in Switzerland: what’s new
December 11, 2023: Lugano has started accepting Bitcoin and Tether for municipal payments.
January 23, 2024: FINMA has authorised a retail trading platform for tokenised securities and digital assets. It has extended Taurus’ TDX platform to retail investors.
February 20, 2024: Tyr Capital Partners in Geneva has been raided by Swiss prosecutors following allegations of criminal mismanagement.
May 16, 2024: The Swiss Federal Council has proposed to adopt the Crypto-Asset Reporting Framework (CARF) for better tax transparency.
May 30, 2024: At the London Blockchain Conference, the Swiss Metaverse Association unveiled its regulatory position paper, arguing for positive global regulation of the metaverse.
3. Taxation of cryptocurrencies in Switzerland
In Switzerland, cryptocurrencies are considered assets rather than legal tender like the Swiss franc (CHF). Here is an overview of the taxes involved:
Capital gains tax: Private investors generally do not pay tax on profits from holding and selling cryptocurrencies. However, traders and businesses whose primary source of income is cryptocurrency trading are subject to a capital gains tax (CGT) of up to 7.8%, plus around 10% for old-age and survivors’ insurance.
Wealth 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 salaries, payments, mining, staking or airdrops, is taxed. This income is converted into Swiss francs upon receipt and the progressive federal, cantonal and municipal tax rates apply. Rates vary depending on location and income level.
4. Cryptocurrency mining in Switzerland: key points
Cryptocurrency mining is permitted in Switzerland, but its classification may vary by region. In Bern and Zurich, mining is considered self-employment, while Lucerne and Zug prefer to assess mining activities on a case-by-case basis. Depending on the classification, mining can be considered a hobby, self-employment, or a business, which has tax implications accordingly.
5. Timeline of cryptocurrency regulation in Switzerland
2013: Johann Gevers moved his crypto startup Monetas to Zug. This is how Crypto Valley was born.
2014:Zurich has installed the country’s first Bitcoin ATM.
2016: Switzerland has started promoting cryptocurrencies for financial payments. Zug has accepted Bitcoin payment for municipal services.
2016: The FATF has recognised Switzerland’s LBA framework to prevent illegal financing.
2018: The Swiss Minister of Economy has revealed his goal of positioning Switzerland as a “crypto nation”.
2018: FINMA has published guidelines for ICOs, which adapt financial legislation to cryptocurrencies. These guidelines cover the banking, securities, trading and investment sectors.
2019: FINMA’s ICO guidelines have clarified the regulatory position on stablecoins.
2020: The Swiss parliament has adopted comprehensive regulations for blockchain companies.
2021: The Blockchain Act was enacted, providing a legal basis for cryptocurrency trading.
2021: FINMA has approved the first crypto fund, the Crypto Market Index Fund.
2023: FATF’s enhanced regulations on cryptocurrency monitoring have come into force.
Endnote
Switzerland is a global leader in cryptocurrency regulation, setting a high standard for other countries to follow. Its innovative regulatory framework demonstrates how fintech can drive economic growth. The country’s ongoing updates to its cryptocurrency regulations underscore its commitment to advancing the digital finance sector. Switzerland’s approach demonstrates how positive, forward-thinking regulation can create a crypto-friendly, safe, and secure environment.
Switzerland continues to play a leading role and remains a shining example of effective regulation.
Also see: Cryptocurrency Regulations in the Netherlands 2024