The Swiss Government is Paving the Way for Crypto Banks

Regulators in Switzerland are moving quickly to create regulation that accommodates digital currency and blockchain startups.

AccessTimeIconNov 18, 2016 at 3:00 p.m. UTC
Updated Sep 11, 2021 at 12:37 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now
Franz Grüter
Franz Grüter

Swiss Parliament member Franz Grüter could hardly be happier that his proposal for new blockchain regulations has been shot down.

For months, he resisted the government's requests to kill his motion, which would have changed the definition of a bank to make it easier for cryptocurrency companies to open in Switzerland.

"We got this," was the gist of what they told him. "Thanks, but no thanks."

But Grüter, who was elected to represent the Lucerne region of Switzerland a year ago, remained skeptical.

"The reason I was frustrated was that I didn't believe how bureaucracies work, how bureaucracy works in governments," Grüter told CoinDesk. "I was not expecting that they would really say what they were writing. So, I kept my motion in place."

Two months later, he changed his mind. In August, the Swiss Financial Market Supervisory Authority (FINMA) (which oversees the nation's financial sector) finally convinced him what they were working on would amount to a real impact on blockchain companies — and soon.

Instead of lowering the amount of capital required for banks to keep on hand, the regulation currently being prepared will create an entirely new category of financial institution, he said.

Grüter calls this new breed of company a "crypto-bank," and since he's rescinded his own motion to change the law, he's pledged his support to these new financial entities.

Grüter told CoinDesk:

"I'm more than open to help the whole industry. If there are any further hurdles for them, we can eliminate those hurdles. Up to now, I can say my influence worked."

Square one

Grüter said he first became aware of the issues faced by cryptocurrency startups when he was approached by Xapo CEO Wences Cesares, who was then considering whether to move his bitcoin wallet provider's headquarters to Switzerland.

The information technology veteran and current chairmen of Swiss Internet firm ended up receiving multiple "complaints" from blockchain entrepreneurs, and in order to better serve them, he sought the advice of local industry insiders.

Following the recommendation of Zug, Switzerland-based lawyer Andreas Glarner and the Switzerland Bitcoin Association founder Luzius Meisser, Grüter opened his first bitcoin account and began to experiment by purchasing the cryptocurrency.

Then, in May of 2015, Cesares officially moved Xapo's headquarters to the Zug region of Switzerland known as "crypto-valley". (He confirmed to CoinDesk that he continues his work with Swiss regulators and that he can't comment further).

This was soon followed by regulatory action.

The following month, Grüter and fellow Swiss Parliament member Claude Béglé collectively filed three blockchain-related motions. According to Swiss law, FINMA then had the right to recommend that such motions be passed, shot down or the ability to make a counter-proposal.

In this case, Grüter says he was unwilling to rescind or "liquidé" his own motion until he was contacted by a surprising source – the person who set him on on his cryptocurrency crusade, Wences Casares.

"Wences approached me and he told me, 'Hey Franz, you won't believe it, they are totally excited, they want to introduce now a new group of crypto-banks that has totally different regulations,'" Grüter said, adding:

"I decided there is no need at this point that I push it further since my intervention already worked and the government is making the changes proactively by themselves."

The future of 'crypto-banks'

Now that Grüter has rescinded his initial proposal, he says he’s only getting sporadic information about the future of these new financial entities.

But thanks to a series of public documents, the crypto-banks makeup is beginning to take shape.

Just days after Swiss rail operator SBB announced it would begin offering bitcoin via its ticket kiosks, Switzerland's Federal Department of Finance (FDF) published the first details about the project.

Revealed earlier this month, these so-called "FinTech licenses" may be granted by FINMA with capital requirement as low as CHF 300,000, or 5% of the accepted public funds. (The total amount of public funds that can be accepted by those with a FinTech license may not exceed CHF 100m).

The day before the FDF published the license details, FINMA released a corresponding document that helped lay the framework by redefining corporate governance guidelines for banks.

Specifically, the document instituted the proportional application of certain regulations, "leaving institutions free to implement the requirements in a way that takes account of their differing business models and of the particular risks associated with them."

But that isn't all. Yesterday, FINMA defined its strategic goals for the four years beginning in 2017. The document explicitly mentions a "pro-innovation approach to supervision and regulation, and tackling newly emerging risks," as among the regulator’s top priorities.

From the document:

"The long-term success of Switzerland's financial centre depends largely on its ability to innovate. FINMA is therefore adopting a more pro-innovation approach to regulation and supervision and will push for the removal of unnecessary regulatory obstacles for innovative business models."

The mind shift

Though an exact timeline has yet to be published, Switzerland’s Federal Council has instructed the FDF to complete a draft of its legislative amendments by the beginning of next year.

Some of the proposed measures could even be enacted by an executive order at an earlier date, according to Bitcoin Association Swtizerland founder, Luzius Meissner.

As part of that work, the FDF is expected to join forces with related authorities to clarify certain stipulations and further reduce barriers for FinTech startups.

According to Grüter, behind all these changes is nothing less than a total shift in the way Switzerland views cryptocurrency startups.

Instead of being focused on the potential risks, Grüter argues that his colleagues have determined to prioritize the potential benefits.

"The mindset is completely changing now from a certain critical, not really knowing what are the threats of the technology to a very open-minded, opportunity-driven people," said Grüter.

Meisser reiterated Grüter’s position, but more cautiously.

"It is great to see that the government finally starts to think about realizing opportunities instead of eliminating risks. Often, governments tend to overemphasize the latter while neglecting the former," he said.

"However, it is too early to cheer. It remains to be seen which suggestions actually will survive the political process."

Bitcoin where his mouth is

Since Grüter opened his bitcoin account with BreadWallet earlier this year, he said he’s mostly just focused on how to buy the digital currency and track its price changes.

But over the coming months, he expects to make his first bitcoin purchase using the wallet.

Already, the canton of Zug has voted to accept bitcoin for payment of certain government services, with further evaluation by the end of this year.

But as the SBB plan to start accepting bitcoin goes into action, he thinks his first purchase will be for a ticket to ride.

Grüter concluded:

"This makes it much more widely public now, and probably I will use it mostly there."

Image via Franz Grüter; Shutterstock


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.