on the crypto
On June 17, the National Council of Switzerland unanimously approved a legislative package that amends a dozen financial laws. The changes, proposed by the Swiss Federal Council, aim to remove legal obstacles to blockchain and distributed ledger technology applications.
A political goal
Switzerland has long been a magnet for blockchain startups. The city of Zug, in particular, was a popular place for token-funded projects during the 2017 initial coin offering (ICO) boom, earning the nickname Crypto Valley.
As the ICOs have vanished, Switzerland's enthusiasm for blockchain technology has remained alive. “It is known that Switzerland is trying very hard to encourage the blockchain business. It's a political goal, ”said Rolf H. Weber, professor of financial market law and chairman of the Swiss Blockchain Federation's regulatory team.
The new laws
As it exists now, Swiss law is cumbersome, particularly when applied to the transfer of security tokens, Weber said. All transfers must be made in writing, like the traditional bond exchange. But the new legislation will facilitate the transfer of security tokens, Weber said - which is already possible with software like Bitcoin Revolution.
The new statutory provisions would allow owners to appeal to the authorities to claim their property. The new laws also contain eight provisions that describe how digital ledger technology suppliers and trading platforms can obtain a license from the financial authority.
Although the legislative package has passed without opposition, according to Meisser, left-wing politicians have raised concerns about new laws that do not address the environmental impact of bitcoin mining, a process that requires large amounts of energy and resources.
Change the big picture
Instead of proactively regulating new financial instruments, Swiss lawmakers first try to apply existing laws, said Luzius Meisser, founder of the Bitcoin Switzerland association.
"Once it doesn't work anymore, then we create a new law," said Luzius. In his view, Switzerland does not consider blockchain technology or crypto resources as unique entities, but as extensions of existing tools. According to Weber, the new laws will change the overall picture to improve conditions for owners and suppliers of crypto assets.
Tax reduction
At the current state of the situation, bitcoin mining is exempt from Value Added Tax (VAT), while some security tokens are exempt from withholding tax and there are no taxes on capital gains on investments.
According to Luzius, Switzerland has a withholding tax calculated on dividends earned from traditional securities such as bonds or shares. Weibel of the tax authority said that this tax also applies to "tokenized shares" to ensure that all investors are treated equally.
To encourage earnings through investment, the country does not tax capital gains on any investments and the Department of Finance which assesses the need for new tax laws concluded that it was not necessary to start with cryptocurrencies.
