In the wake of Japan’s blockchain and crypto – focused laws, the Swiss parliament approved the motion to launch crypto asset regulations. It will now be reviewed by the upper house of parliament (Council of States) following the motion approval in the National Council or lower house of the federal legislature of Switzerland.
On March 20th, the Swiss Federal Assembly, which handles government law, approved a motion directing the Federal Council to regulate cryptocurrencies.
The motion proposed by Giovanni Merlini, Liberal Parliamentarian, aims at instructing the Federal Council to adapt current provisions on procedural instruments of the judiciary and administration, to be applicable also to cryptocurrencies. With 99 to 83 votes in favor and ten abstentions, the Council approved the motion.
The motion represents the first step in addressing issues such as money laundering, and criminal fraud. Although these are all significant issues in government-sponsored fiat currencies such as the Swiss Franc, fiat currency has strict regulations in place that allow the government to prosecute criminals and regulate market activity and unfair practices such as price manipulation.
There is often no such regulation in cryptocurrency, which allows major asset holders (“whales”) to apply what are tactics of illegal price manipulation on the stock market without any legal impact. Much of the volatility that has been attributed to deliberate manipulation in the price of bitcoin in recent years. According to the Swiss news media outlet, the National Council received the majority of votes in favor of the country’s crypto regulations. Giovanni Merlini presented a motion for adoption of a regulation on digital currency in the lower house of the Swiss parliament.
The move aims to close perceived gaps in protecting users of cryptocurrency from illegal activities such as extortion and money laundering.
The law will determine how the risks of cryptocurrency are to be stifled and whether crypto – trading platforms should be equated to financial intermediaries and therefore, be monitored by the financial market.
While whales manipulate prices by suddenly placing large purchases or selling orders to create market panic, it is often difficult to prosecute cryptocurrency fraud because tendering for cryptocurrency is often unnamed.
In earlier March, the Swiss International Bank Authority, the Basel Banking Supervisory Committee (BCBS), warned of the possibility of strong growth increasing concerns and risks to financial stability faced by cryptographic banks. The BCBS also argued that crypto – assets are ‘unsafe’ in terms of value exchange or store, two of the core currency functions.
Although the banks may be worried, with open arms, the government welcomed cryptocurrency. At a crypto finance conference, Swiss Minister of Economics Johann Schneider – Ammann said that Switzerland aims to be the “Crypto nation.” Swiss Finance Minister Jörg Gasser said earlier that while the market is not as “disciplined” as the government wants, it is aimed at supporting a “flourishing” cryptocurrency industry.