Crypto regulations in Switzerland 2024

Switzerland is the richest European country. It is famous for its strong economy. The country has a welcoming attitude towards financial technologies. It is one of the most crypto-friendly countries on the European continent. It was in 2016 that the country first adopted this view. Since then, many policies have been introduced to support the development of the blockchain and cryptocurrency sector. It is currently the main European destination for blockchain and cryptocurrency businesses. Switzerland is one of the few countries in the world with a regulatory framework supporting cryptocurrencies for financial payments. Understanding Switzerland's crypto regulatory framework is important because it can explain how a country can positively use the concept of regulation to achieve growth and stability. Be prepared to lie! ready?

1. Crypto Regulation in Switzerland: General Overview

Cryptocurrencies are classified as an asset class in Switzerland. Crypto regulation in the country is overseen by the Swiss Financial Market Supervisory Authority known as FINMA. This authority basically acts as a licensing and regulatory authority. It offers four unique crypto licenses: fintech, exchange, investment fund and bank. Ensures strict adherence to the country's Anti-Money Laundering Act. The country recently adopted new guidelines to improve regulatory oversight of crypto exchanges and other digital asset services, the country's Financial Action Task Force, known as the FATF. More than 1,000 blockchain and crypto-based businesses have recently set up their headquarters in the country. Recently, the country has made some serious attempts to improve the web3, blockchain and cryptocurrency environment. Among them, the most famous was the introduction of the ‘Blockchain Act'.

1.1. Swiss Blockchain Law: What is it?

The so-called ‘Swiss Blockchain Law' is a set of revised laws that provide general legal regulations for blockchain-based businesses. The law improves investor protection by identifying crypto assets and increasing legal certainty in events such as bankruptcy. Interestingly, it reinforces the country's principle of technological neutrality. In particular, the most important aspect of the act is the creation of a new license category for trading systems based on distributed ledger technology. It even provides transparency on crypto asset taxation.

1.2. Swiss Crypto Valley: Does It Exist?

A few minutes ago we were told that Switzerland is home to several crypto tycoons. is true? Once you listen to Zug's story, this doubt will never cross your mind again. why?

Here's the story of Zug – the Swiss crypto valley.

Zug is a major hub for cryptocurrency companies. The change began in 2013 when Johan Gevers moved Monetas to Zug. The term ‘Crypto Valley' was coined in 2010. It was created by Mai Alyse during the Ethereum Foundation discussion in 2014. In the year In 2017 Zug attracted more than 40 crypto-foundations. The local government has supported this development by simplifying registrations, offering Bitcoin for services and assisting with visa applications. The Zug model's formula for success is the right combination of business-friendly laws, strategic location and low tax rates.

2. Crypto regulation in Switzerland: what's new

December 11, 2023: Lugano begins accepting Bitcoin and Tether for municipal payments.

January 23, 2024: FINMA approves retail trading platform for tokenized securities and digital assets. Expanded the Taurus TDX platform for retail investors.

In the year

May 16, 2024: The Swiss Federal Council proposes to adopt the Crypto-Asset Reporting Framework (CARF) for better tax transparency.

May 30, 2024: At the London Blockchain Conference, the Swiss Metaverse Association unveils its regulatory position. It supports positive global measurement rules.

3. The Crypto Taxation Framework in Switzerland is explained

As previously stated, Switzerland considers cryptos as property. Swiss franc (CHF) is not considered legal tender. Capital gains tax, wealth tax and income tax are the three taxes we are looking at here.

Capital gains tax

For individual investors, profits from the sale of holdings and cryptocurrencies are generally tax-free. For traders and businesses where crypto trading is the main source of income, the profits are subject to capital gains tax (CGT) of up to 7.8% and 10% for superannuation and survivors insurance.

Wealth taxes

Cryptocurrencies will be subject to wealth tax if the total value of your assets exceeds the exemption on December 31.

Income taxes

Income from cryptocurrencies such as wages, fees, mining, staking or weather is subject to income tax. The proceeds will be converted to Swiss Francs upon receipt. Switzerland's progressive federal, cantonal and municipal tax rates apply. Income tax rates vary by location and income level.

4. Crypto Mining in Switzerland: What you need to know

There is no limit for crypto mining in Switzerland. In general, the country considers crypto mining as an income. However, different regions have different views on this issue. For example, in Bern and Zurich, cryptocurrency mining is a self-employment option. At the same time, Lucerne and Zug disagree with giving a general classification. Instead, they prefer to go into the details and break down mining operations. According to them, mining can be self-employment, hobby or business. This means that the tax implications of mining depend on where you live. Naturally, mining that is considered a business will have to pay more taxes than one that is considered a hobby.

5. Timeline of Crypto Regulation Evolution in Switzerland

2013: Johan Gevers moves crypto startup Monetas to Zug. It marks the creation of Crypto Valley.

2014: Zurich establishes the country's first Bitcoin ATM.

In the year 2016: Switzerland begins introducing cryptocurrencies for financial payments. Zug accepts Bitcoin payment for council services.

2016: FATF recognizes Switzerland's AMLA framework to combat money laundering.

In the year 2018: Switzerland's economy minister reveals his goal to position Switzerland as a “crypto nation”.

2018: FINMA issues ICO guidelines aligning financial laws with cryptocurrencies. The guide includes banking, securities, business and investment plans.

2019: FINMA's ICO guidelines clarify the regulatory position on stablecoins.

In the year 2020: The Swiss Parliament approves general regulations for blockchain businesses.

In the year 2021: The Blockchain Act is enacted, providing a legal basis for trading cryptos.

In the year 2021: FINMA approves the first crypto fund, the Crypto Market Index Fund.

In the year 2023: FATF reform of crypto regulatory rules goes into effect.

A final note

Switzerland stands out as a global leader in crypto regulation. Europe's financial superpower has set a high standard for other aspirant countries to follow. The country's crypto regulatory framework serves as a model for how fintech can boost economic growth. The country's ongoing reforms and amendments to its existing crypto regulations reflect its strong commitment to growing the digital finance sector. Switzerland's approach shows how positive and progressive regulation can shape a user-friendly, as well as safe and secure crypto environment. The country has been a prime example of forward-thinking regulation while leading the way.

See also: Crypto regulations in the Netherlands 2024