Switzerland - Crypto penetration

intro

Switzerland is a global leader in banking and fintech. It has an enhanced fintech and crypto regulation framework since 2017. Moreover, Switzerland has a fundamentally different regulatory system for VASPs — they must obtain banking and financial licenses there. For digital nomads who want to move this country has an advanced immigration system. The main criteriф for applicants to move to Switzerland is to prove their payment solvency or their skills essential in the country's economy. So, the conventional basis to move is to find a job in the country before you move or student visa. Also, getting a Swiss golden visa for investments is an option. It's also possible to set up a company with locals and move based on this option.

Security level

Switzerland is a safe place and has a good security level, according to our rating. The jurisdiction has 75.1 points (from 100) for safety level in Numbeo crime rating (1). The homicide level (2) is 0.5 per 100,000 inhabitants a year. The story of firearm-related death (3) is 2.64 per 100,000 inhabitants yearly.

Crypto Payments

According to the position of the leading crypto regulator, FINMA (4), paying for goods and services in crypto is legal.

Switzerland has no financial market regulations covering the buying and selling of virtual crypto assets or their use as a means of paying for goods and services. In other words, no special authorization under financial market law is required for these activities. This applies to everyone who pays with crypto assets or buys these as well as to all those who accept payments in crypto assets.

Also, the Zug department had an initiative (5) to allow pay taxes in crypto, and Lugano announced in 2022 that “Bitcoin, Tether, and Lugano’s own LVGA Points token” will become “de facto” legal tender” in this city.

Crypto Salaries

Glassnode Accounting notes (6) that it’s legal to pay salary in crypto in Switzerland, and there is a lawful procedure for crypto salary taxation.

Individuals who receive cryptocurrencies as part of self-employment can declare them as main or additional income. The value of the cryptocurrencies in Swiss francs at their receipt should also be recorded, just like the value of regular salaries.

An employee who has received bitcoins or other cryptocurrencies as wages and/or benefits should declare this as taxable income. The value of the received cryptocurrencies in Swiss francs at the time of receipt of the salary paid by the employee should be recorded on the salary statement.

Operating crypto companies

There is no list of registered crypto companies. In 2020, the total number of blockchain companies in the country was estimated (7) at 900.

Legal

Although crypto regulation was implemented in the country long before 2020, only in that year it was implemented DLT Federal Act (8) and DLT Ordinance (9). You may see more information about the Blockchain Act on the official government website (10). According to it “on 1 August 2021, the Federal Act came into force”. Cointelegraph (11) has noticed that after the adoption of the DLT Act, the government has also updated the crypto regulation framework to define exceptional cases such as investors’ protection, company bankruptcy, and AML.

According to Sum Sub guide (12), Switzerland has no VASP license. Instead of that, operating crypto companies get different types of fintech licenses required by the following laws:

Anti-Money Laundering Act (AMLA) (13);

The Banking Act (14)

The Collective Investment Schemes Act (15)

The Financial Services Act (16) and the Financial Institutions Act (17)

ALMO (18)

According to law firm SBSB (19), Switzerland has four main types of digital asset licenses.

the fintech license permits the acceptance of public deposits on a commercial basis of up to 100 million CHF, as well as cryptocurrency assets without the right to invest or pay interest on deposits;

the banking license for companies that hold and manage digital deposits in unlimited quantities from individuals or legal entities;

an investment fund license gives the right to make investments in crypto assets and control them on behalf of depositors;

DLT (Distributed Ledger Technology trading system license) trading platform license allows trading in tokens and securities stored in a distributed electronic registry.

Swiss Info (20) states Switzerland has no crypto exchange/VASP/e-money license. Crypto exchanges in this jurisdiction must get a “fintech banking license, collaborate with existing banks or otherwise design their setup to avoid Swiss banking regulation.”

You may see more details in the short license guide from FINMA (21). FINMA is the primary federal crypto regulator in Switzerland.

Information about token sales regulation may be found in the FINMA ICO Guideline (22).

According to the Law Review (23) interpretation, “In 2021, the DLT Act introduced a new license category for trading platforms where DLT rights qualifying as securities are traded.

A FinTech license is probably the most accessible license for crypto companies in the country. You may see more information on how to get it in the guide on the FINMA website (23). There is a quote from it below.

Quote

On 15 June 2018, the Swiss Parliament approved provisions for the promotion of innovation in the BA and created an extra licensing category (FinTech license) for institutions that accept public deposits of up to CHF 100 million without actually engaging in any lending activities, i.e., without investing or paying interest on the deposits. The Federal Council specified the FinTech licensing conditions as part of a partial revision of the Banking Ordinance (BO). In contrast to the FinTech license, the regulation-free space known as the sandbox has been in effect since August 2017. The sandbox exception allows public deposits of up to CHF 1 million without requiring a banking license, whereby compliance with AMLA provisions and affiliation to a self-regulatory organization is needed. The new permit aims to facilitate innovative business models. It is, therefore, in the spirit of this innovative approach for licensing not to be based on a specific type of static business model. The new license applies to all business models that accept public deposits (depending on the structure of the business model, for example, payment services provider, depository of cryptocurrencies, or crowdlending), which corresponds to the principle based Swiss regulatory approach. FINMA published guidelines on its website explaining the requirements of the corresponding licensing applications to speed up processing as much as possible.

Crypto scene is elusive. Around (27) 1,000 companies in Switzerland deal with crypto. Half of them are in Zug’s “Crypto Valley, “ yet the scene here is still elusive.
In July 2024 FINMA has published (28) its Guidance on Stablecoins. This document harmonizes status of stablecoins in Switzerland with MiCA. The regulator noticed that legal requirements for stablecoins in the country will be the same as to banking deposits or collective investment schemes. Stablecoins issuers operating in Switzerland must have a special license or bank guarantee. Bank sponsor in this case has a financial responsibility for user funds similar to bank deposits.

Although Switzerland didn't legalized Bitcoin ETFs, it has equivalent in the form of ETPs. In February 2024 Swiss Exchange SIX claimed (29) that listing of crypto backed ETPs on the exchange is legal.

Taxation

The Swiss Federal Tax Service (SFTA) regulates crypto taxation in the country. The main types of federal taxes are income tax, capital gain tax, and wealth tax. There are also local taxes in different regions; information about them will be added in the next version of Switzerland Overview. You can also check details in the official guide from SFTA (24). It’s available in French/German.

Tax name	Index
PIT tax Max	45.5%
PIT tax Min	22.1%
Corporate tax (CIT)	21%
Max Individual CGT (for crypto)	21%
Min Individual CGT (for crypto)	11.9%
Wealth tax Max	1
Wealth tax Min	0.3

Current details of crypto taxation are based on the Koinly guide (25) as the primary source. If you have any feedback - please write us.

PIT

For example, if an employee receives cryptocurrency as a salary, this is part of their taxable income. The value of the cryptocurrency in Swiss Francs at the time of receipt must be noted on the pay slip. Similarly, if a self-employed person accepts Bitcoin or other cryptocurrencies to provide their services, this income must also be included in the income in the equivalent amount in Francs.

Other crypto transactions that are subject to Income Tax include:

Mining crypto.

Staking crypto.

Airdrops of crypto.

PIT rates between 22.1% and 45.5%.

Sometimes, you'll pay Income Tax on your crypto - where you're seen earning crypto.

CGT

Crypto is considered a private wealth asset - like a stock or a bond. Capital Gains Tax does not apply to personal wealth assets for private investors in Switzerland. Capital Gains Tax only applies if you're a self-employed trader or a business. For individuals, crypto is subject to Income Tax in some instances, as well as Wealth Tax.

You'll pay no Capital Gains Tax on your profits from selling or trading crypto:

You've held your crypto asset for at least six months.

You have a trading turnover smaller than 5x your holding at the beginning of the financial year.

Your net capital gain is less than 50% of your income throughout the financial year.

You have no debt financing.

CIT

According to Offshore-protection (26), there are three types of taxes for legal entities: federal, canton, and federal. The national tax rate is 7%. Each canton has its tax rate between 11-24%. Zug has a tax rate of 14%, where a majority of the cryptos are based.

Most cantons have a Wealth Tax of 0.3 - 1%, so it's not a high tax rate. Each canton also has a Wealth Tax exempt allowance - a portion of private wealth you don't pay tax on. Again, this varies based on the specific canton you live in, but usually it is around 100,000 CHF per individual taxpayer. You can find out more about your canton's Wealth Tax rates here.

Links

1)Crime Index by Country 2023 Mid-Year

2)List of countries by intentional homicide rate

3)List of countries by firearm-related death rate

4) Cryptoassets. Article

5)Switzerland’s Progressive Push for Cryptocurrency. Inside Switzerland's vision to become a global leader in the cryptocurrency sector

6)Crypto Taxes in Switzerland: The Complete 2023 Guide. Article

7 and 16)New Swiss laws provide solid ground for blockchain and crypto. Article

8) DLT Federal Act. PDF-file

9) Ordinance. PDF-file

10)Switzerland Crypto Regulation Guide—2023. Article

11)Anti Money Laundering Act (AMLA). PDF-file