Switzerland’s Federal Council has proposed a plan aimed at easing regulation on financial technology companies. The new project is expected to drive competitiveness within the Swiss fintech industry by helping companies more easily expand.
The lighter legislation is expected to promote innovation, preserve jobs in the Swiss fintech industry and lower barriers to market entry.
“We assume that with the steps we have prepared and the commitment we have to the overall financial services industry we can provide a solution that puts us among the top (countries) in the world that regulate this,” Finance Minister, Ueli Maurer, said at a news conference in Bern.
The government will establish a new fintech license, issued by the Swiss Financial Market Supervisory Authority (Finma). It will be granted to institutions that operate in deposit taking business not lending.
The cabinet plans to create a sandbox innovation area that would allow companies to receive up to CHF 1 million without being controlled by Finma.
Also, it plans to set a deadline of 60 days for keeping money in settlement accounts, what will facilitate crowdfunding services. The government plans to let providers get money without permission from an unlimited number of people, as currently they can accept funds from 20 people at most.
“Fintech is going to be an important element of our financial marketplace strategy,” Maurer said at a press conference. “We want to offer solutions that allow Switzerland to advance to a top fintech center internationally.”
Switzerland has quite favorable conditions for becoming a fintech center, given its banking history. However, Swiss fintech environment is still lagging behind New York, Singapore, and London. Maurer expects the proposed changes to the legislation will urge more companies to establish their businesses in Switzerland.
The Ministry has yet to define the legal status of digital currencies and clarify the regulation of the distributed ledger technology.
According to the Finance Ministry officials, the draft legislation could be sent to the Swiss parliament by the middle of 2017, following a public consultation.
In general, the use of fintech providers is steadily growing today. According to the recent report from Capgemini, over half of all banking customers prefer fintech startups to satisfy their financial needs.
As Finextra reported, more than 75% of clients in China and India are using services of fintech companies, followed by Hong Kong and the UAE. Meantime, the lack of trust is the main factor impeding the wider adoption of fintech providers.