A dynamic fintech system can contribute significantly to the quality of Switzerland’s financial centre and boost its competitiveness. Against this backdrop, the Federal Council called for an easing of the regulatory framework for providers of innovative financial technologies during its meeting on 2 November 2016. This easing should reduce barriers to market entry for providers in the fintech area and increase legal certainty for the sector overall. The Federal Department of Finance (FDF) was instructed to prepare a corresponding consultation draft.
Digitisation in the financial business is advancing rapidly and has given rise to different business models in the fintech area. Accordingly, the requirements of these players for low barriers to market entry are different. The Federal Council is striving for a future-oriented solution which is as comprehensive as possible and is thus recommending an approach with three supplementary elements:
The first element sets a deadline of 60 days for the holding of money in settlement accounts, which is particularly relevant for providers of crowdfunding services. Fundraising for a crowdfunding project can thereby be facilitated. This amendment would not be restricted to fintech companies, and would instead be generally applicable.
The second element is a sandbox (an innovation area). In this area, a provider can accept public funds up to a total value of CHF 1 million. These activities do not have to be authorised and are not monitored by FINMA. This fact must be disclosed, however. The current money laundering provisions are applicable in the case of a sandbox.
The third element is a new fintech licence granted by FINMA. For institutions which are restricted to the deposit-taking business (acceptance of public funds) and thus do not operate in the lending business with maturity transformation, less stringent regulatory requirements should apply than those for classical banks. Involvement in the depositor protection system is thus not envisaged.
The public funds accepted by providers with a fintech licence may not exceed the overall value of CHF 100 million. So long as protection of the individual client is guaranteed by special conditions, FINMA can authorise a higher threshold. For institutions with the new licence, the minimum capital should amount to 5% of the accepted public funds, but no less than CHF 300,000.
The creation of a fintech licence is also pioneering by international standards. The new regulation sets out in concrete terms one of the strategic thrusts of the financial market policy recently adopted by the Federal Council. The Federal Council has instructed the FDF to draw up a consultation draft with the required legislative amendments by the start of 2017. Moreover, the FDF should conduct additional clarifications in cooperation with the interested authorities on reducing further barriers to market entry for fintech firms, also those outside financial market law (e.g. legal treatment of virtual currencies and assets).
