Switzerland To Ease Red Tape For Fintech Startups
Swiss government proposes new rules to help financial technology startups enter the market
The Swiss government is proposing new rules to help encourage the survival and growth of financial technology (fintech) start-ups.
The Federal Council believes that by easing the regulatory framework for providers of financial technologies, it will help encourage a more competitive and dynamic Swiss financial centre.
Swiss Proposals
The wish to reduce the red tape for fintech firms and increase legal certainty for the sector overall, has come as the Federal Department of Finance (FDF) prepares a consultation.The draft, work on which will begin early next year, could see the introduction of new banking laws in Switzerland.
The Swiss are proposing three possible changes.
The first involves setting a deadline of 60 days for the holding of money in settlement accounts, mainly to help startups looking to raise funds through crowdfunding. At the moment donors can withdraw their cash after seven days. Apparently this extension to 60 days would not just be restricted to fintech companies.
Secondly the Swiss want to establish a sandbox or innovation area, where a startup could accept public funds up to a total value of 1m CHF (£838,000) to setup and test new ideas under controlled conditions. Activities do not have to be authorised and are not monitored by financial authorities.
And thirdly the Swiss want to create a new fintech banking licence that is less onerous than a traditional banking licence. This would apply to startups offering deposit services and which do not lend money.
“The creation of a fintech licence is also pioneering by international standards,” said the Federal Council.
Changing World
The Swiss proposals are a sign of the changes sweeping through the financial services industry, driven by the emergence of fintech players.
Earlier this year for example citizens and businesses in the city of Zug, capital of the eponymous canton in central Switzerland, took part in a trial that sees them able to pay for public services up to the value of 200 Swiss Francs (£143) in Bitcoin.
That development was part of a trial to see how the use digital currencies can promote the region’s Fintech sector.
Meanwhile in the UK the Bank of England seems to have adopted a more conservative approach compared to the Swiss. It warned last year that Bitcoin could pose a threat to financial stability in the UK should it see widespread adoption.
The British government on the other hand is looking into how blockchain technology could be used to help it manage and keep track of the distribution of public money, such as grants and student loans.
Meanwhile IBM research recently predicted that blockchain would be used by majority of financial institutions within three years.
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