It is hardly possible to find a more hospitable country when it comes to the use of cryptocurrencies than Switzerland. The first crypto companies appeared here in 2013, and today the Swiss canton of Zug is considered a real crypto valley, which is very popular among global blockchain projects, startups, and ICOs. This jurisdiction regularly improves cryptocurrency legislation, maintaining a positive and dynamic approach to the problem of regulating the crypto sphere. Here, cryptocurrency companies are offered the opportunity to innovate without facing obstacles from outdated legislation.

 

For those looking for a transparent regulatory framework, a strong crypto community, and a favorable taxation system, we recommend registering a crypto company in Switzerland. This country can be a very promising jurisdiction for your crypto business. The main thing is to take care of the exact fulfillment of all the conditions of the local regulator, as well as to prepare the right package of documents. The Lawrange Law Firm will help you to deal with these and other registration issues.

 

Legislation on the regulation of the crypto sector

The Swiss Financial Market Supervisory Authority (FINMA) is responsible for cryptocurrency-related activities. Entrepreneurs who are interested in a crypto license in Switzerland should contact this authority. In addition to licensing, its responsibilities also include monitoring compliance with the country’s legislation and international regulations on combating financial crime.

 

The basis of FINMA’s regulatory activities is the federal law “On Adaptation to Developments in the Field of Distributed Ledger Technology” (the so-called DLT Law). It is this legislative act that determines how cryptocurrency activities should be carried out in Switzerland. It provides rules for:

 

  • licensing of cryptocurrencies;
  • trading;
  • combating money laundering;
  • formation of the financial market infrastructure for cryptocurrency trading.

 

The DLT Law aims to protect the integrity and stability of the Swiss financial market, where blockchain companies are liable for any damage caused to investors that may be caused by misleading information or violation of legal requirements.

 

According to this law, the Swiss National Bank is obliged to ensure the stability of the financial market infrastructure and control the activities of financial market participants (DLT trading centers, central securities depositories and payment systems). At the request of the Swiss National Bank, each regulated company must provide information and documentation necessary to identify risks that threaten the stability of the financial market system.

 

Cryptocurrency companies operating in Switzerland or abroad are required by law to comply with anti-money laundering legislation. It generally applies when customer assets are moved in the accounts of a cryptocurrency company or when payment transactions, currency exchange, asset-based lending or leasing, private wealth management, and the issuance of payment instruments are included in the cryptocurrency business model.

 

Types of ICOs issued

According to Swiss law, it is possible to issue tokens:

 

  • Payment tokens – a means of electronic payment used for money transfers (ether, bitcoin and other cryptocurrencies). At the same time, a service provider working with such tokens must, as a rule, obtain a crypto license in Switzerland, which allows it to operate as a financial intermediary.
  • Asset-backed – perform the function of shares, bonds, and are therefore divided into:
    • Debt – required to repay all or part of the investment with subsequent interest payments.
    • Equity tokens – do not provide for a return on investment, but the token holder is entitled to a cash payment.
    • Participation tokens – like the previous type, they do not oblige the issuer to return the investment, but the token holder is entitled to a proportional share of the issuer’s future profits.
  • Service tokens – it can be used to gain digital access to a system or service that is mostly available on a specific DLT platform (if it is not classified as securities, it does not require a license).

 

Depending on the type of tokens used to conduct economic activity, securities, banking and collective investment laws may also apply. Even if tokens are not recognized as legal tender, FINMA does not consider them to be securities because they are intended to be used as a means of payment.

 

Important! The regulation of initial coin offerings (ICOs) depends on the type of tokens offered. ICOs involving payment tokens are subject to anti-money laundering laws, while ICOs involving asset-backed tokens or service tokens must comply with the securities rules of the Swiss Code of Obligations.

 

Main types of licenses for cryptocurrency activities

If the business falls into any of the regulated categories, the entrepreneur should apply for one or more crypto licenses before starting economic activity in Switzerland. If a license is not required, a crypto business can be registered with FINMA as a self-regulatory organization (SRO), which will also have to comply with certain administrative requirements. Depending on the business models and the nature of the cryptocurrency-related activities, FINMA issues four types of licenses.

 

FinTech license

The most popular is the Financial Transaction License or Financial Intermediation License, which allows licensees to accept deposits of up to CHF 100 million, provided that it is not invested and does not pay interest. As soon as FINMA receives an application for a crypto license in Switzerland of this type, it begins to check the company’s commercial activities. Additionally, it may be necessary to submit a license audit report. The duration of licensing depends on how complex the project is, as well as the quality and completeness of the application.

 

Banking license

An authorization document with which licensed companies can legally hold deposits from individuals or legal entities. Deposits can be accepted in the amount of no more than CHF 100 million.

 

Investment fund license

An investment fund license allows fund managers to control assets on behalf of clients. It is allowed to invest only in a certain type of asset with a high trading volume. In this case, you should use counterparties and platforms that are established in the territory of the member countries of the international organization FATF.

 

DLT trading system license

A license for a DLT trading platform is required for those companies that plan to carry out multilateral securities trading. As a rule, this process takes place through the simultaneous exchange of offers between the participants of the trading platform with the subsequent conclusion of contracts based on the principle of “retail clients”. A company with such a license must ensure the storage of DLT securities in a centralized registry, guided by uniform rules and procedures.

 

Advantages of obtaining a license in Switzerland

Switzerland has long been considered a leader in the banking sector, which is characterized by its conservatism. In the race of financial innovation, the Swiss lagged far behind until they began to actively implement and regulate crypto assets. Over the past decade, hundreds of fintech startups have opened here, the lion’s share of which falls on the canton of Zug, nicknamed the crypto valley. But in fact, fintech activity goes far beyond the Zug cluster, including Zurich, Geneva, and others. At the same time, the cryptocurrency sector is actively replenished with new forces and resources. The main reason for this is a number of advantages that become available to those who want to obtain a license to exchange cryptocurrencies in Switzerland.

 

Active support of the cryptocurrency environment

The ecosystem for the development of fintech startups, including cryptocurrency ones, is being created in this jurisdiction through the joint efforts of the state, scientific organizations, and private companies, including international large banks. In 2015, the first incubators and accelerators specializing, among other things, in the crypto industry began to open here. Prominent representatives of fintech incubators are:

 

  • Fusion, opened with the support of the École Polytechnique Supérieure de Lausanne (EPFL), annually selects a dozen startups from around the world to receive 12 months of professional training at the incubator.
  • F10 is a fintech incubator/accelerator in Zurich that selects startups in three programs.
  • NexusSquared is an independent platform specializing in assisting blockchain startups.

 

It offers young cryptocurrency companies a wide range of technology coworking spaces with preferential terms of accommodation. In addition, any fintech project can count on a number of government benefits:

 

  • Tax (at the cantonal level).
  • Payroll subsidies.
  • Office rental benefits.

 

A long tradition of banking secrecy

One of the important advantages for any cryptocurrency project operating on the principle of open information exchange, but for which the main rule is to respect the right of anonymity of system participants. And the Swiss government is sympathetic to this condition. The fact that the Swiss legalized digital currencies was a confirmation of their loyalty to digital currencies, and the Swiss were among the first in the world to do so. From the legal point of view, cryptocurrencies are classified as foreign currencies and therefore do not require the application of separate legislative norms.

 

Qualified labor force

A solid banking history has provided Switzerland with the strongest experts in the industry:

 

  • cryptography
  • encryption and security systems;
  • personal data storage, etc.

 

Thus, a cryptocurrency license in Switzerland will provide entrepreneurs with access to highly qualified labor.

 

Loyal tax policy

Despite the need to pay taxes at the federal, cantonal, and local levels, the tax burden here is several times lower than in some prestigious European jurisdictions. At the same time, an entrepreneur can choose the most suitable canton for business. The canton of Zug has the most attractive tax rates for foreign companies – from 4% for privileged companies and up to 15.3% for all others. In addition, companies founded by non-residents can take advantage of the possibility of exemption from dividend tax.

 

The procedure for applying for a cryptocurrency license in Switzerland

The first task of an entrepreneur is to make sure that licensing is available for the type of cryptocurrency activity in Switzerland that interests him or her. FINMA helps to determine this before submitting an application. To create a convincing business case, we recommend that you consult with the legal experts of Lawrange. They will assist in the proper preparation for filing an application, in filling it out and providing information about your company.

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Company registration in Switzerland

It is necessary to register a legal entity in one of the following legal forms: Public limited company (AG) or Limited liability company (GmbH). The company should choose a name through the EasyGov platform, which will automatically enter the company in the Swiss register and assign it a unique identification number (UID). It is also necessary to specify the members and provide their personal data. It is important that the company can confirm a registered local office.

 

Other requirements:

 

  • At least one shareholder and a member of the board of directors, who must have the appropriate level of qualifications, experience, and be free of criminal record.
  • Availability of an auditor.
  • Hiring of local staff.
  • Appointment of a Swiss corporate lawyer.
  • Development of an internal AML policy and other risk management policies related to the specifics of the planned economic activity.

 

Opening a bank account

A corporate account is required to deposit the authorized capital. To do this, you will need to collect a fairly extensive package of documentation, consisting, among other things, of the company’s corporate documents, passport data of owners, directors, certificates of no criminal record, etc. The account can be opened in a bank, including a foreign bank.

 

Deposit of the authorized capital

Initial capital requirements may vary depending on the type of crypto license. Standard requirements:

 

  • For GmbH companies – 20,000 Swiss francs (approx. 19,668 euros), which must be transferred to a Swiss bank account or deposited in cryptocurrencies or other assets.
  • For AG companies – CHF 100,000 (approx. EUR 98,352), of which at least 20% must be transferred to a Swiss bank account or deposited in cryptocurrency or other assets.

 

Preparation of documents

In order for a license for cryptocurrency exchange in Switzerland or any other license to be issued without delay, it is necessary to properly prepare a package of documents, which, among other things, should consist of:

 

  • Copies of passports of the owners and directors of the company.
  • Copies of the Swiss residence permit (for foreign nationals).
  • A document confirming the address of residence of each owner and director.
  • Copies of work certificates, resumes and certificates of education of the owners and company management confirming the availability of relevant education and experience.
  • A Swiss certificate of no criminal record (the original of which must be no older than six months) for those who have been living in Switzerland for more than 5 years. For citizens who have lived in Switzerland for less than 5 years, the certificate must be issued in the previous country of residence.
  • Corporate documents.
  • Business plan, including budget (balance sheet and income statement) for the next three financial years.
  • Information about commercial premises, infrastructure and staff.
  • Proof of the company’s funding source.
  • A documented operating model consisting of audit reports on the hardware and software used for economic activities, including third-party systems.
  • Detailed information on the storage of customer deposits, etc.

 

If the application is submitted by a legal representative, a power of attorney (a certified copy of the power of attorney) is required.

 

Submitting an application

The application package should be submitted to FINMA with the ready-made documentation. A fee of EUR 1,750 is payable upon submission of the application. If necessary, the Regulator may request other additional documents. A personal meeting will also be required to provide a business case. If there are legal entities among the shareholders or management of the company, corporate documents must be submitted in apostilled form.

 

The application can be submitted either in one of the official languages of Switzerland or in English. However, for some documents (e.g., articles of association and organizational structure documents), it is required to be executed only in one of the official languages.

 

Obtaining a license

A crypto payment license in Switzerland is issued after successful completion of the previous stages. The company is obliged to start its activities no later than 6 months after obtaining the license. Otherwise, it can be revoked. After licensing, FINMA should be notified of any changes in the structure and activities of the licensee (key documents, top management, technical setup, etc.).

 

About taxation and reporting

The Swiss tax administration system is characterized by a multi-level system, which is represented by the requirements of the Federal Tax Administration (FTA), cantons and municipalities. Federal tax rates are not subject to change, while cantonal tax rates change annually and are published on the official website of each canton.

 

The tax regime of crypto companies is determined by the nature and purpose of their economic activities. As a rule, cryptocurrencies are not considered as paper money. Instead, most of them are classified as assets and, therefore, are subject to the relevant tax laws.

 

Most licensed crypto companies, regardless of the level of taxation, need to take care of paying tax:

 

  • Corporate income tax (CIT) – 12%-21%.
  • Capital gains tax (CGT) – 0.001%-0.5%.
  • Value added tax (VAT) – 7.7%.
  • Withholding tax (WHT) – 35%.
  • In the form of social security contributions (SSC) – 0.5%-5.3%.
  • Stamp duty (ISD) – 1%.

 

In certain situations, cantonal and community tax exemptions apply to foreign companies. They may be taxed at an effective tax rate of 7.83%-11% on foreign-sourced income.

 

Financial statements must be prepared by any company whose revenue exceeds 500,000 Swiss francs (about 491,763 euros). Cryptocurrency companies should keep in mind that they can submit reports either in Swiss francs or in their functional currency, and prepare such reports either in one of the official languages of Switzerland or in English. Signed hard copies of annual reports and audit reports must be kept for 10 years.

 

Why you should contact Lawrange

The specialists of our law firm are ready to provide qualified legal assistance, namely.

 

  • Comprehensive advice on crypto licensing in Switzerland.
  • Establishing coordination with the FINMA regulatory authority in the process of reviewing your application.
  • Preparation of a full package of documents drawn up in accordance with the requirements of local legislation.
  • Obtaining a crypto license in Switzerland on a turnkey basis.

 

The specialists of our company will ensure that you pass the licensing process quickly and with minimal hassle. All work will be carried out in full compliance with Swiss crypto legislation.

 

Conclusions.

The registration of a crypto license in Switzerland is intended for those entrepreneurs who are interested in providing virtual services related to cryptocurrencies. Licensed crypto activities in this country have a number of advantages, which makes it especially attractive to investors and entrepreneurs around the world.

 

In order to obtain a Swiss crypto license, it is necessary to overcome several stages, each of which involves the fulfillment of certain requirements and conditions. Licensees are subject to strict scrutiny by the state regulator FINMA. In order to ensure that the licensing process is successful and as fast as possible, we recommend using the comprehensive services of Lawrange Law Firm.

 

FAQ

How long does it take to obtain a cryptocurrency license in Switzerland?

It will take about 3-4 months to register a company, and it can take up to 12 months to obtain a crypto license in general.

 

What is the validity period of a cryptocurrency license in Switzerland?

Any type of cryptocurrency permit, including a license for a crypto exchange in Switzerland, is issued for an unlimited period. However, it is required to pay an annual state fee of 3500 euros.

 

Is it possible to deposit the authorized capital in cryptocurrency?

This is possible in some cantons, in particular in Zug. Bitcoin is accepted here as a form of payment for the authorized capital.

 

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