Regulation of the cryptocurrency market is constantly becoming stricter. Nowadays jurisdictions impose high regulatory and risk management requirements on virtual asset service providers.
Despite this, we always manage to find a solution that suits the client. All the time our team provides research of the market and regulations on various markets to find the best jurisdiction. Not so long ago we have made the global overview of the VASP regulation in EEA and ready to share information with our future and existing clients. Today we will look at the features of obtaining a cryptocurrency license in Switzerland.
Tax Summary:
- Personal income tax (federal, married taxpayers) – from 0% to 11.5%
- Corporate income tax (federal) – 8.5%/7.8% (effective)
What law/s governs VASP activities?
- The Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (“DLT Act”)
- FINMA ICO Guidelines
- Anti-Money Laundering Act (“AMLA”)
- Anti-Money Laundering Ordinance (“AMLO”)
- FINMA Anti-Money Laundering Ordinance
- Financial Market Supervision Act (“FINMASA”)
What activities are included in VASP services?
Unlike AML regulations in many other countries, Switzerland does not use the concept of Virtual Asset Service Providers (VASPs). Instead, crypto companies are considered regulated if they fall under one of the categories of financial intermediaries, as listed in the law (AMLA and AMLO).
A financial intermediary refers to individuals or legal entities involved in providing payment services or overseeing the issuance and administration of a form of payment. Thus, the offering of services through payment tokens and the issuance of payment tokens are considered to be the provision of a means of payment in accordance with this regulatory framework.
According to the current practice established by FINMA, the conversion of cryptocurrency into fiat or other cryptocurrency is subject to Art. 2 point 3 of AMLA. The same principle applies to services that facilitate the transfer of tokens, where the service provider retains control of the private key (custodial wallet provider).
In the case of asset tokens, the AMLA regulates trading capabilities for distributed ledger technology (DLT) securities in accordance with Article 73a FinMIA (DLT trading capabilities).
Anti-money laundering rules do not apply to utility tokens if the primary purpose of issuing the tokens is to provide access rights to a non-financial application of blockchain technology.
Who is the VASP regulator?
- Swiss Financial Market Supervisory Authority (“FINMA”)
What is the procedure for registering a VASP for a local company?
FINMA grants five types of authorisation: licensing, recognition, authorisation, approval and registration. The supervisory intensity varies depending on the type of authorisation concerned. If a license isn’t required, a crypto business may be registered with FINMA as a Self-Regulated Organization (“SRO”) who will also have to adhere to certain administrative requirements.
To become a member of an SRO, a wealth manager will normally need to provide a certificate or character, letters of reference and a business plan. Additionally, they must possess relevant education and experience in the field. Depending on the SRO in question, intermediaries may have to meet additional criteria.
There are currently eleven Swiss self-regulatory organizations listed with FINMA and connected through the Forum SRO/OAR/OAD.
Is there any specific authorization required for a VASP from another EU member state to provide services in this jurisdiction?
Companies or individuals wishing to engage in financial-market activity need authorisation from FINMA, which checks that they meet the relevant regulatory requirements. Only those satisfying the financial, personnel-related and organizational requirements qualify for authorisation.
What is the liability for the activities of a VASP from another EU member state without local registration/authorization in this jurisdiction?
According to Chapter 4, Article 44 of FINMASA anyone who wilfully without a license, recognition, or registration carries out an activity that requires a license, recognition, or registration under the financial market acts is liable to a custodial sentence of up to three years or a monetary penalty. Where the offender acts through negligence, he or she is liable to a fine of up to 250,000 francs. In the case of repeating the offense within five years of the conviction taking full legal effect, the monetary penalty amounts to a minimum of 45 daily penalty units.
Manimama Legal & Growth Agency provides a gateway for the companies operating as the virtual asset wallet and exchange providers allowing to enter to the markets legally. We are ready to offer an appropriate support in obtaining a license with lower founding and operating costs. We offer KYC/AML launch, support in risk assessment, legal services, legal opinions, advice on general data protection provisions, contracts and all necessary legal and business tools to start business of virtual asset service provider.
The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.
