TBW - Regulation: Is Switzerland isolating itself by overregulating?
This is a major strategic shift that is being played out discreetly in Berne. Until 6 February 2026, the Federal Council is consulting the industry on a comprehensive revision of the financial markets laws, including money laundering and financial institutions.
While the stated intention is to modernise the system following the commercial failure of the "FinTech License" and to prepare for the visit of the FATF (Financial Action Task Force) in 2027, the technical outcome is akin to "bringing the sector to heel". For investors and entrepreneurs, the devil is hidden in the details of a text of more than 100 pages that reshuffles the cards of Swiss competitiveness.
We analysed the three pillars of this reform with Biba Homsy, a lawyer specialising in compliance and an active member of the Crypto Valley Association.
The end of the "Financial Intermediary" (SRO) model?
This is the most impactful measure for the local entrepreneurial fabric. Historically, Switzerland has built its ecosystem on a cascade system. At the lower end of the scale, crypto players could operate as "financial intermediaries", supervised by Self-Regulatory Organisations (SROs) and subject only to the Anti-Money Laundering Act (AMLA), without suffering the heavy prudential direct supervision of FINMA, the financial regulator.
The bill intends to remove this flexibility for the majority of payment players.
The measure: Creation of a new authorisation category for "means of payment institutions".
The impact: Crypto payment service providers, hitherto flexibly supervised, will switch to direct and increased supervision. "The majority of issuers of means of payment and payment providers are going to be subject to increased supervision, whereas until now simple affiliation was sufficient," explains Biba Homsy.
The issue: The regulatory entry threshold is exploding. For a start-up or financial SME, compliance costs could become prohibitive, encouraging market consolidation around established banking players, who paradoxically have little interest in this segment.
Stablecoins: regulatory asymmetry
The treatment reserved for stablecoins illustrates a desire for control that could backfire on local issuers. The text introduces an unprecedented dichotomy that puts domestic production at a disadvantage.
The draft distinguishes between two categories:
Stablecoins issued in Switzerland (described as stable payment crypto-assets): They will be subject to strict coverage, guarantee and redemption requirements, modelled on or even higher than banking standards.
Foreign stablecoins (type USDT, USDC): If they are issued outside Swiss territory, they fall into the default category of "trading crypto-assets".
"If tomorrow I issue a 'Swiss Franc crypto' from Switzerland, I am subject to the maximum regulation. But if USDT or USDC are issued from abroad, they are simply considered as trading crypto-assets," analyses Biba Homsy.
This measure creates an immediate distortion of competition: it becomes more advantageous to issue a stablecoin to the Swiss from abroad than from Lausanne or Zug, posing a real risk of loss of sovereignty.
The paradox of open markets
This is the point that crystallises the incomprehension of the players. Switzerland is preparing to adopt standards close to the European MiCA (Markets in Crypto-Assets) regulation, but without benefiting from its advantages, namely the "passporting" to the single European market.
Worse, the bill does not provide for protection of the internal market (absence of rules against reverse solicitation).
The scenario: A regulated player in France (PSAN/MiCA) will be able to canvass Swiss customers without major hindrance.
The Swiss reality: A Swiss player will have to comply with cumbersome regulations for a domestic market of 9 million inhabitants, with no equivalence enabling it to attack the European market.
"We want to put more or less the same rules as MiCA for a considerably smaller country," laments Biba Homsy. "But European players will be able to come to Switzerland because there is no protection for the Swiss market."
The unknown of the ordinances: the risk of enforcement
Beyond the written measures, the concern is about the legislative method. The text refers extensively to "ordinances" to define the practical arrangements for implementation. In Switzerland, these ordinances are drafted by the federal administration, often in consultation with FINMA, without going back through parliamentary debate.
In a post-Credit Suisse context, where the regulator has been criticised for its passivity, the risk is that of an ultra-prudent and restrictive interpretation of the texts. "In terms of legal certainty, this is already quite a breach," notes the lawyer, stressing that it will be impossible for players to predict the actual intensity of supervision when the law is voted.
Why Switzerland was a model until now
To understand the current slingshot, we need to remember why Switzerland became, in less than a decade, the essential hub of the global Web3, attracting the foundations of Ethereum, Tezos or Solana. The success of "Crypto Valley" was not based on an absence of rules, but on a rare legal doctrine: technological neutrality.
Instead of creating specific and rigid legislative "boxes" for each new technology, FINMA and the legislator applied existing principles: an asset remains an asset, whether it is on a paper register or on a blockchain. This approach offered immense legal predictability where Europe was still groping.
To this was added a progressive market entry system, the famous "cascade" model. A start-up could launch as a simple financial intermediary (affiliated to an SRO) to test its model with light compliance costs, before aiming, if successful, for a Fintech or banking licence. It is precisely this regulatory lift, which has enabled a dense industrial fabric to hatch (Bitcoin Suisse, 21Shares, Taurus, Metaco (now Ripple Custody), Sygnum, AMINA Bank etc.), that the new bill threatens to seize up.
The Big Whale's view: a negative signal for innovation?
In an attempt to reassure the FATF and avoid any new financial scandals, Switzerland risks sacrificing its comparative advantage. If the text passes as it stands, the attractiveness of Swiss jurisdiction for Web3 and DeFi projects could collapse in favour of the European Union or the Middle East, which offer frameworks that are now clearer and markets deeper.
The specialist associations are preparing their riposte for the end of the consultation. The aim is to prevent Switzerland going from being a pioneer to an isolated fortress.
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