During 2017, the issue that probably got the most attention for companies raising capital through initial coin offerings (ICOs) was whether tokens constitute securities.  However, governmental agencies and regulators, particularly the Swiss Financial Market Supervisory Authority (“FINMA”), focused on other legal issues as well. It was reiterated that companies issuing cryptocurrencies or tokens have to consider not only securities registration but also anti-money laundering and licensing compliance.

It has also become clear that blockchain-related businesses associated with financial intermediation—whether or not the business itself issues cryptocurrencies or tokens—are similarly subject to regulation. Indeed, on August 30, 2018, FINMA released a Fact Sheet stating: “Anyone intending to operate a blockchain-based business must first find out whether it is subject to licensing requirements under financial market law.” The Fact Sheet also pointed to anti-money laundering and required approvals under financial market laws.


Anti-money laundering (“AML”) requirements are designed to prevent the transformation of profits from illegal activities and corruption into ostensibly “legitimate” assets.  Cryptocurrency exchanges converting cryptocurrencies to fiat currency, custody wallets where the service provider maintains a private key, banks, securities dealers, and assets managers are generally subject to AML requirements. These requirements can include obligations to perform due diligence on the customer (often referred to as “Know Your Customer” or “KYC”), and the ultimate beneficial owner of the assets. These businesses will also need to establish protocols to monitor activity for high risk transactions and politically exposed persons activities, reporting illegal behaviour to the proper authorities, and cooperating with governmental investigations.

Businesses that are considered financial intermediaries (including those that are not subject to “prudential supervision”) under Swiss law, even if they have not otherwise registered with FINMA, will need to register with an AML-self-regulation organization (SRO) or submit to direct FINMA supervision to fulfil their AML obligations.


Trading in cryptocurrencies that constitute securities under Swiss law (that is, equity tokens, derivatives of any type, and tokens that are themselves derivatives) on behalf of clients generally requires a securities dealer license. Securities dealers are required to maintain a minimum capital requirement of CHF 1,5 million and maintain a board and management team fit to execute compliance, risk management, and internal audit procedures.

Taking custody of cryptocurrencies or tokens on behalf of clients also raises licensing issues. The banking license is often considered the most strictly regulated financial market category in Switzerland, with high organizational, capital and liquidity requirements.

Accepting and holding funds from the public, whether in fiat or cryptocurrency, will generally implicate bank licensing requirements, unless it is ensured that the depositor can take ownership of his assets even in the insolvency of the holder of the funds. The capital and liquidity requirements that accompany a bank license pose significant hurdles for custodians of cryptocurrencies and tokens that intend to hold public funds within the meaning of the Banking Act. However, in August 2017, Switzerland offered a regulatory “sandbox” for deposits less than CHF 1 million where no investment or interest is paid and the depositors acknowledge that FINMA is not supervising or guaranteeing their deposits.

Also, it is anticipated that Switzerland will introduce an “innovator license” or “banking license light,” anticipated to be effective January 1, 2019, that adjusts the obligations of fintech businesses accepting funds from the public to align with the practicalities of the crypto-market and fintech business models. The technical implementation of this new license category, however, is pending and will determine whether this is an attractive option for fintech businesses.


Similar to concerns over securities registration, blockchain-related businesses will also need to consider AML and licensing requirements. These requirements are not insurmountable, even by fledgling companies. Switzerland continues to be a practical and welcoming jurisdiction for blockchain-related business—so long as these requirements are addressed correctly before regulators investigate deficiencies in compliance.


Yves Mauchle is an associate in the Corporate Finance practice area in Zurich. He focuses on debt and equity capital markets as well as financial services regulation. Yves regularly represents financial intermediaries and other clients on regulatory matters and advises on the particular challenges posed by fintech business models, including ICOs.