The Federal Council’s proposal for a new regulation of the Swiss Crypto industry

The Federal Council has published a draft act that would significantly reshape the regulatory landscape for Swiss crypto businesses. The public consultation on the draft act closes on 6 February 2026.

The proposal introduces a new classification of crypto-based assets, creates two new types of licences, removes the existing Fintech licence, and brings crypto service providers within the scope of the Swiss code of conduct for financial service providers. Whilst the proposal offers a clearer regulatory framework, greater legal certainty, and provides means to address misconduct, it also increases the regulatory burden on the crypto sector.

The proposal borrows many concepts from traditional financial market regulation, which aligns with the Swiss approach of regulating service providers in a principles-based and technology-neutral manner. Furthermore, the draft act implements recommendations from international organisations such as the Financial Stability Board, the Financial Action Task Force, and the International Organization of Securities Commissions, and is inspired by non-Swiss regulations, namely those of the EU, USA, UK, and Singapore.

Mainly, the following organisations with existing or planned activities in crypto-based assets would be impacted by the revised regulation. These organisations should consider performing a high-level impact assessment for their mid-term strategy.

New classification categories and whitepapers for Crypto-based assets

Currently, Swiss regulation differentiates between asset, payment, and utility tokens, as well as hybrid forms of these three categories. Tokens are referred to as crypto-based assets in the draft proposal, and the classification methodology is revised.

The proposal retains the unregulated category of utility crypto-based assets, and crypto-based assets which represent financial instruments or bank deposits will continue to be treated as such. New are the two categories of “stable crypto-based means of payment” and “crypto-based assets of trading character”. The former is a specific type of stablecoin, and the latter is a broad category aimed at covering payment tokens such as BTC and ETH. For both types of crypto-based assets, a whitepaper must be produced.

Two new categories of Crypto-based assets

“Stable crypto-based means of payment” are issued by a Swiss payment instrument institution and their value is tied to a single fiat currency. They must be stabilised by either holding the reference currency or high-quality liquid assets (HQLA) in segregated custody. The issuer is obliged to redeem the coins against payment of the referenced fiat currency upon the holders’ request.

“Crypto-based assets of trading character” is a catch-all category for crypto-based assets that are neither issued by a central bank or a state (such as Central Bank Digital Currencies, CBDC), nor utility crypto-based assets, nor representations of financial instruments or bank deposits, nor “stable crypto-based means of payment”. The category would cover most coins currently classified as payment tokens. Stablecoins not meeting the criteria of “stable crypto-based means of payment”, for example, because they are not issued by a Swiss payment instrument institution, also fall into this category.

Whitepaper

For both “stable crypto-based means of payment” and “crypto-based assets of trading character”, a whitepaper must be published. A Swiss payment instrument institution issuing “stable crypto-based means of payment” must always publish a whitepaper. As for “crypto-based assets of trading character”, a whitepaper is only required if the coin is offered publicly to retail investors or if it is intended for admission to trading on a DLT exchange. The person offering the coin or applying for admission to trading in Switzerland is responsible for publishing the whitepaper. This may be the issuer or another person. The Federal Council could define exemptions from the duty to publish a whitepaper at ordinance level. The exemptions may be based on the volume, the value of the offered coins, the issuer’s characteristics, or the number of persons to whom the offer is addressed. Whitepapers produced under non-Swiss rules but equivalent to Swiss ones may be used in Switzerland. Service providers recommending a “crypto-based asset of trading character” to clients will have to provide a whitepaper, whether drafted under Swiss rules or considered equivalent.

Whitepapers for “stable crypto-based means of payment” must contain information on the issuing payment instrument institution, the coins, the rights, obligations, and duties of the holders, and the technology on which the coins are based. It must also set out how the assets backing the coins are kept in custody and the mandatory anti-money laundering (AML) measures implemented.

Whitepapers for “crypto-based assets of trading character” must include information on the offeror of the coins or the person applying for admission to trading of the coin and the persons responsible for the content of the whitepaper, if identifiable. The rights, duties, and risks of the holders must be disclosed, as well as the technology on which the coins are built. If the value of the coin is determined by referencing one or several assets, the mechanisms to determine the value must be set out in the whitepaper. How such a coin could be differentiated from one representing a financial instrument, namely a derivative, structured product, or a unit in a collective investment scheme, is not clear for now.

At the beginning of both types of whitepapers, the most important facts must be summarised. Unlike securities prospectuses, whitepapers are not approved by a reviewing body and must disclose this fact. They may be published in English or an official language of Switzerland.

Adverts for “crypto-based assets of trading character” and for “stable crypto-based means of payment” must be recognisable as such and include a reference to the whitepaper. All adverts and other information targeted at buyers must be consistent with the information in the whitepaper.

The draft act explicitly states that persons negligently making incorrect or misleading statements or not covering the legal requirements in whitepapers may be held liable.

New licence types and code of conduct

The draft act would abolish the Fintech licence and replace it with a payment instrument institution licence. The new licence offers more possibilities than the current Fintech licence, but the regulatory requirements are stricter. In addition, the introduction of the crypto institution licence will govern some trading activities in “crypto-based assets of trading character”. Many concepts from this licence type are based on the securities firm activity, but the requirements will be less strict. This licence type will cover many activities for which currently only a registration with a self-regulatory organisation for AML purposes is required. In addition to the licences, and like the existing financial market regulation, service providers for crypto-based assets will have to adhere to the same code of conduct as financial service providers.

Payment Instrument Institutions

The Payment Instrument Institution licence allows for keeping client funds in custody, issuing “stable crypto-based means of payment”, keeping such crypto-based assets in custody, and providing payment services.

In contrast to the CHF 100 million limit applying to the deposit-taking activity of Fintechs, payment instrument institutions will not be restricted by a volume cap when accepting client funds. “Client funds” differ from public deposits as per the banking regulation and cover all liabilities to clients. Exemptions from this very broad definition are expected at ordinance level.

Like Fintechs, payment instrument institutions cannot pay interest or a return to clients but are allowed to offer payment services. Client funds may be invested in high-quality liquid assets (HQLA) with a short remaining maturity. The ordinance will define what this means. For now, the idea is that not only class 1 HQLA such as sovereign bonds may be used but also other instruments like money market funds and (reverse-) repos. Instead of investing the client funds, they may also be kept in sight deposits at the SNB, a bank, or another payment instrument institution. The HQLA or the sight deposits must be in the same currency as the client’s claim for payout, sufficiently diversified, and kept in custody segregated from the institution’s own assets. This is to establish a separate pool of assets that facilitates the resolution of the payment instrument institution. The client funds accepted must always be covered, except for negative interest accrued, which may be deducted. The payment instrument institution may keep positive interest and profits realised with HQLA, provided the client funds are covered. The details will be defined at ordinance level.

The market capitalisation of the “stable crypto-based means of payment” issued by the institution is treated like client funds and must always be covered. “Stable crypto-based means of payment” kept in custody by the institution but not issued by it are not treated like client funds but must be kept segregated from the institution’s own assets, must always be available, and must be allocatable to the specific client.

The capital requirements for payment instrument institutions will be calculated progressively (i.e., the more client funds are accepted and the higher the risks of the business activities, the higher the capital requirement) and at a consolidated level in the case of financial groups. The accounting standards, the consolidated supervision principles, and the requirements for non-Swiss owned institutions will apply by analogy to the banking regulation. Details will have to be defined at the level of the ordinance.

“Significant” institutions will have to establish recovery and resolution plans. The Federal Council will establish criteria to define when a payment instrument institution qualifies as significant. Depending on the type and volume of the business activity, some institutions may also require a licence as a payment system.

Payment instrument institutions issuing “stable crypto-based means of payment” must implement AML measures on the issued coins and maintain those throughout the lifetime of the coin. When placing the coin with the first holder in the primary market and when redeeming the coin from the last holder, the institution must perform AML duties on the holder, namely customer due diligence and know your customer checks. In addition, the issuing institution must manage the AML risk in the secondary market by implementing appropriate measures. Which measures are considered appropriate depends on the institution's risk assessment, which must be performed before issuing the coin, and on the latest technical possibilities. The draft proposal lists two examples of such measures. One is maintaining a blacklist of wallets to or from which the coins may not be transferred, and the other is to ensure that holders of the coins in the secondary market are identified by equivalently regulated and supervised financial intermediaries. Issuing institutions must always be able to block single transactions in the secondary market, and to freeze and/or redeem single coins.

Only payment instrument institutions, but not banks, can accept client funds or issue “stable crypto-based means of payment”, since the two concepts of accepting public deposits and accepting client funds shall not be commingled in the same entity. Therefore, a bank would have to establish a licensed subsidiary to pursue these activities.

Fintech institutions licensed under the current regulation must not apply for a new licence with FINMA but will have to meet the new requirements for payment instrument institutions within one year after the new act enters into force. In cases where an activity did not require a licence under the current regulation, an application must be submitted within one year of the entry into force and the new requirement must be met as of then. The activity may be continued until FINMA has decided on the licence application, provided the institution is a member of a self-regulatory organisation for AML purposes.

Crypto institutions

Crypto institutions may keep in custody “crypto-based assets of trading character” and “stable crypto-based means of payment” for clients and manage the private keys (i.e., providing custody wallets). The institutions can also trade in their own name but for the account of clients in “crypto-based assets of trading character” (i.e., client trading), trade on a short-term basis in stable “crypto-based assets of trading character” and quote prices for single coins (i.e., proprietary trading and market making), and operate an organised trading facility for “crypto-based assets of trading character” (i.e., operating an OTF). The institutions may also maintain fiat settlement accounts to support the trading activities. All the mentioned activities only require a licence if performed on a commercial basis. The threshold for an activity to qualify as commercial will be defined at ordinance level.

The draft act and the explanatory report state that crypto institutions may not take on-balance sheet risks, by, for example, offering margin accounts, proprietary trading in derivatives, or entering into short positions. This would impose considerable restrictions on the business models of crypto institutions.

When providing custody services, the clients’ coins must be kept segregated from the crypto institution’s own assets, must always be available, and allocatable to the specific client. Appointing a non-Swiss but appropriately regulated and supervised sub-custodian is allowed. The draft act explicitly allows providing staking services, if appropriate risk management measures are implemented, the rights, obligations, and risks are disclosed to the clients, and the staking services are governed by a specific agreement and not just in the general terms of business. Details on the custody requirements and the provision of staking services may be set out at ordinance level.

Crypto institutions must have sufficient capital on an entity level and on a consolidated basis. Institutions engaging in client trading or proprietary trading will have to manage risks appropriately, will be subject to liquidity requirements, and must keep records of orders and trades. The requirements will be specified at ordinance level and will depend on the specific business model and the associated risks. As for accounting, consolidated supervision, and the requirements for non-Swiss owned crypto institutions, the banking regulation applies by analogy.

In cases where an entity does not require a licence under the current regulation, but would require one under the new regime, an application must be submitted within one year of the entry into force and the new requirement must be met as of then. The activity may be continued until FINMA has decided on the licence application, if the institution is a member of a self-regulatory organisation for AML purposes.

Code of conduct for service providers

Persons providing services in relation to “crypto-based assets of trading character” on a commercial basis will be subject to the financial service code of conduct. The activities in scope of the code of conduct are the same as for services provided in relation to financial instruments, being executing or forwarding orders, portfolio management, investment advice, and granting loans to trade in “crypto-based assets of trading character”.

All persons providing such services must adhere to transparency and duty of care when handling client orders, organisational requirements, and information duties. This includes managing and mitigating conflicts of interest and preventing front- and parallel running of client orders. It also means that a whitepaper must be provided to clients and risks and costs are disclosed. Service providers offering portfolio management or investment advice will have to perform suitability or appropriateness checks, which may involve creating a risk profile of the client and their portfolio. If the service provider opts for performing client segmentation, some of these duties do not apply for services provided to institutional and professional clients.

Conclusion

For now, the revised act is in a draft stage, and the legislative process will certainly bring some changes. The direction of the draft act, however, is to introduce new regulatory requirements to the Swiss crypto sector. The aim is to support the perception of the Swiss crypto industry and to protect clients from rogue market participants. For those able to handle the additional regulatory requirements, this could be a benefit leading to increased business volume. Other jurisdictions and the EU may or may not grant access to their markets due to stricter regulation of the sector. Stricter regulation, however, is not detrimental to this cause.

A high-level assessment of the draft act’s impact makes sense for crypto businesses and traditional financial market participants that want to outline courses of action for their mid-term strategy. The following market participants operating in or out of Switzerland (including those having Swiss clients/coin holders) could benefit from such an assessment:

Exchanges and brokers for crypto-based assets currently operating with a registration at an SRO for AML purposes

Large proprietary traders, market makers, and liquidity providers for crypto-based assets

Persons providing services in relation to crypto-based assets, such as investment advice or portfolio management

Issuers of crypto-based assets, including decentralised autonomous organisations

Banking groups intending to launch a stablecoin in Switzerland

All traditional financial service providers and institutional investors, considering introducing or expanding services or exposure in relation to crypto-based assets in the mid-term

If your organisation falls under any of these categories, feel free to reach out. Our team is glad to support you, so you can remain competitive and grasp opportunities in a changing regulatory environment.