- The Swiss Bankers Association (SBA) published a paper emphasizing the importance of stablecoins for Switzerland’s global competitiveness and highlighting regulatory challenges.
- Strict Swiss regulations require stablecoin issuers to identify holders at all times, making it hard for issuers to operate economically.
- The SBA calls for clear rules as current regulations rely on a patchwork of existing laws and present barriers to stablecoin growth.
Last month, the Swiss Bankers Association (SBA) released a paper discussing the opportunities and risks of stablecoins in Switzerland. The paper follows a review by Swiss regulator FINMA on stablecoin rules and highlights the need for Switzerland to keep up with international competition in digital currencies.
According to the SBA report, Switzerland has three main areas of stablecoin activity. Central money-backed tokens are available to institutional investors, with examples from digital asset bank Sygnum and SIX Digital Exchange. A few stablecoins are accessible to everyday users, though they lack brand recognition. Additionally, banks like BBVA Switzerland offer access to major U.S. dollar stablecoins.
The SBA noted that strict regulations are slowing stablecoin growth in Switzerland. Unlike other countries, Swiss law requires stablecoin issuers to know the identity of every holder at all times—not just during issuance or redemption. As stated in the SBA paper, “there has been criticism that FINMA has tightened its practice beyond the existing international standard and the money laundering principles applicable to date, to the detriment of issuers.” Swiss legal experts have called this level of regulation “Swiss Gold-plating,” and say it may make issuing stablecoins difficult from a business perspective. More information about this view can be found here.
Switzerland currently lacks a stablecoin-specific legal framework, instead relying on existing laws that classify stablecoins either as deposits or investment schemes. Non-bank issuers need a bank guarantee, making these assets similar to traditional bank deposits and raising concerns about risks to banks. This situation is part of why FINMA is revisiting its regulatory stance.
The SBA paper explores alternatives for stablecoin reserves, favoring strong support like central bank money, government securities, and bank deposits. The Swiss National Bank has ruled out creating a retail Central Bank Digital Currency (CBDC), a step that would be similar to the most secure type of stablecoin.
The report reviews common uses for stablecoins—such as digital payments, decentralized finance (DeFi), and cross-border corporate payments—while reminding readers of their role in maintaining the position of the Swiss Franc in the world economy. However, it also warns that more stablecoin use may reduce bank deposits, which could affect financial stability if not properly managed.
The SBA concluded, “Overall, the issuance of a Swiss franc stablecoin offers opportunities for Switzerland and its financial centre, but requires careful consideration and clear regulatory measures to manage the associated risks and exploit the full potential of this innovative technology.” More details on the SBA’s position can be found in their paper.
Regulatory clarity remains the main hurdle as the industry seeks practical solutions for growth and innovation.
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