Cryptocurrency license in Switzerland

Since 2021, Swiss legislation has undergone changes aimed at reliable crypto-currency activities. The crypto license in Switzerland is under the control of a specialized management center Zug, which the authorities support. This country has the most favorable conditions for developing the crypto business.

How is the crypto industry regulated?

In this country, several government agencies regulate crypto activities. FINMA controls the activities of banks, crypto programs, and insurance companies, is responsible for issuing crypto licenses, and monitors compliance with AML/KYC. Since 2021, this country has approved the law on simplifying the federal law on developing electronic list technology. This law has provisions on crypto-licensing, buying and selling virtual currency, and fighting to prevent illegal transactions. The main legal act is the Law on Banking Activities and control over compliance with FINMA rules. In a country, virtual currency is a crypto asset or property that can be exchanged and used in commerce. Switzerland cryptocurrency is divided into the following types by the country’s legislation:
  • tokens for making payments – they are only a means of payment; for a VASP, it is necessary to obtain a broker’s license;
  • tokens – as a property / financial asset – they are associated with the right to support (asset tokens) and require mandatory licensing;
  • utility tokens – they give the right to use a digital service or service; these assets carry the properties of monetary instruments (utility tokens); in general, this case does not require a permit.
For a company that plans to engage in crypto, you need to apply for a crypto license from FINMA.

Features of working with crypto assets

Working with cryptocurrency is subject to the selected type of licensing (there are 4), and this activity is also taxed. Depending on which crypto license in Switzerland is issued to the company, it can only engage in those operations that correspond to this licensing.

Taxation

In this country, there are such types of taxation:
  • Nationwide;
  • Cantonese.
The amount of the national tax will be 7 – 8.5%, and the rate of the same tax for the cantonal indicator will be 12 – 24%, but it can change every year. The worldwide income of a company resident in this country is subject to local taxation. If this is a non-resident company, it is taxed on income received within the country.

Features of the functioning of crypto exchanges

Cryptocurrency exchange license

The activities of crypto exchanges are carried out based on the permit obtained. There are 4 types of crypto licenses in this country.

For a company to start its activity in the field of cryptocurrency, it needs to decide what type of activity it will be engaged in. It depends on the license a crypto exchange in this country will be issued.

The work of crypto platforms falls under the following types of licensed activities:

  • fintech: acceptance of deposits in the amount of up to 100 million Swiss francs without further investment;
  • banking: protection and management of digital deposits without limiting the amount;
  • investment fund: for investing crypto assets and their control;
  • a platform for sale: for the sale of tokens that are listed in the e-list
Another crypto exchange activity is becoming a self-governing organization (SRO) member. Such a firm can provide financial services as an intermediary: crypto asset management, sale of tokens (securities), payment services, and lending.

Types of crypto permits

According to the requirements, all financial activities belong to one of the types of licenses.

For the exchange of cryptocurrencies

Such licensing entitles the crypto exchange to carry out securities trading and is controlled by the Financial Market Infrastructure Act (FinMIA). Its purpose is the synchronous exchange of offers and the signing of contracts based on the rules of retail customers, the storage of securities in the main vault, and the settlement of contracts with assets that have the property of protection based on uniform norms.

Fintech

It allows the company to accept federal deposits of up to CHF 100 million or crypto assets if they are not invested and there is no interest paid. Once an application for such a license has been received, FINMA checks the firm’s financial activities and may also require reporting on the audit within the permit’s limits.

Banking

The need to obtain it arises in such cases:
  • if the firm receives deposits from more than 20 clients, and their value or the amount of crypto assets is more than 100 million CHF;
  • if the company receives deposits from residents of the country (on a professional basis) for up to 100 million CHF and invests or pays interest on federal deposits;
  • if the company reinvests itself to a greater extent through bank loans (if there are more than 5 banks), which do not own significant funds, to lend to firms with which they do not form a monetary unit.
Thus, there are three conditions under which a company must obtain this type of permit.

For an investment fund

The Fund can invest only in certain crypto assets with many trades. Moreover, investments are made only through certain counterparties and crypto platforms in a member state of the FATF. But there is another type of crypto activity: the company is a broker. To be an intermediary, you must be a member of the SRO. For crypto activities in this country, there is a large selection of licensing options for companies.

How is the licensing process going?

Non-fiat currency is considered to be a numeric value that is used for buying and selling through web channels. And this means that the virtual currency was recognized as a financial asset, which impeded the creation of a licensing area.

To obtain a crypto currency exchange license, the declared organization must go through the following steps:

  • choose the type of assets to work with;
  • approve the business project;
  • determine the organizational and legal direction;
  • draw up documents: constituent, for registration, internal rules of the company;
  • submit documents for registration to the regulatory body;
  • pay the fee;
  • get a crypto permit.

If all the conditions are met, and the regulator has no comments on the documents and structure of the company, then the license will be issued.

Features of opening an organization in this jurisdiction

A crypto license in Switzerland can be obtained by a resident firm that has been registered in this country. A company like LLC is best suited for this. Swiss laws provide such options for legal entities with this type of financing, but this depends on the kind of service offered. To open a new company, you must do the following:
  • choose the type of activity;
  • develop a business project;
  • collect data on all founders and employees of the company;
  • give the company a name and reserve it;
  • choose a legal address for the company;
  • open a bank account and deposit authorized capital;
  • prepare documents: constituent and for filing for registration;
  • to register for taxation;
  • get a permit.
It can be challenging to go through all the above steps on your own, so we advise you to seek help from our lawyers.

The cost of a crypto license

The cost of a crypto license depends on many parameters, so you can contact our specialists to find the exact amount. They will analyze your organization’s activities and tell you what costs you will face.

Benefits of this jurisdiction

Issuing a crypto exchange license in Switzerland is a costly process, but registering a company in this jurisdiction has a large number of advantages. Firstly, this country has a perfect investment climate and a stable economy. Due to the absence of corruption and unnecessary bureaucracy, you will be able to put all your efforts into developing your business. Secondly, a huge number of crypto enthusiasts live here, so you can find new clients easily. At the same time, having a license in this jurisdiction allows you to work in many developed countries. Thirdly, a clear and relatively simple legal framework for regulating the crypto industry has been created here. If you are willing to work honestly and openly, no problems will arise. As we can see, many favorable factors exist for starting your own crypto business in this country. And the costs associated with obtaining a cryptolicense are fully justified.

FAQ

Yes, virtual currency exists legally in the country. Relatively stable rules have been created here to regulate this industry.

Cryptocurrency is subject to state and Cantonese taxes. Every crypto organization that operates in this jurisdiction is required to pay taxes regularly.

FINMA and SFTA control crypto activity in the country. These regulators ensure that crypto businesses are not used for money laundering, fraud, and financial terrorism.