Swiss Fintech Financial Sandbox – Updated

Switzerland is rather a sort of enigma when it comes to fintech companies. The country is home to some of the most friendly and lenient laws when fintech and crypto businesses are concerned, and if you're looking to launch a Swiss fintech company, then we have some good news for you. The Swiss fintech sandbox is simply a legal framework that allows fintech companies to operate and practice launch without applying for authorisation or being supervised by the SRO or FINMA.

Are you ready to launch in the Swiss fintech sandbox? Let us know and we can help you out!

Great news for fintech business owners is that the Swiss Government, as well as Parliament, have laid frameworks that work to prioritise the fintech economy. This means that creation of a neutral legal frameworks within Switzerland is a leading priority, allowing Swiss fintech company investors to move businesses into Switzerland with little to no issue at all.

The main driver behind this governmental framework is the Swiss' forward-thinking regime places being a booming international leader in fintech at the top of the agenda. This has allowed countless new fintech companies to appear in Switzerland every year and has allowed them to obtain any and all the help they need.

It's expected that Switzerland will become one of the worlds most powerful fintech hubs in less than a decade.

The Swiss governments strategy is outline below

1. The development and promotion of a license-free innovation locale
2. Adaptions to regulation which allow fintech business models to thrive
3. A newly developed Financial Innovators Service License is released

One of the leading issues with Swiss fintech laws was that the development was hindered by the Swiss requirement of fintech businesses having to receive and hold client deposits – requiring a license to do. The previous Swiss Bank Act only allowed for banks to receive and hold client deposits, which disallowed unregistered fintech companies from doing so – rendering them useless.

This law has since been reformed with the adding of a new regulation. This regulation can be found in Article 6 of paragraph 2 in the BO:

"Anyone who, over a long period of time, accepts more than 20 deposits from the public or makes call (offering) to the public to obtain them does not act in a professional capacity within the meaning of the Banking Act if they:

• a) accepts deposits from the public for a total amount of no more than 1 million francs; AND

• b) do not invest or remunerate such deposits, AND

• c) informs the depositors, in writing or by any other means allowing to establish the proof of it by a text, before these make the deposit:

1. that it is not supervised by FINMA, and
2. the deposit is not covered by the deposit guarantee."

The above is what is now allowing for Swiss fintech companies to operate.

A basic way to outline what the Swiss fintech sandbox is, is to say that it is a system that allows for an open, innovation-focused business environment which allows fintech and other financial service providers an open place to test how their business models work.

This testing is done so without the need for licensing as well as without needing the make major launch deposits. All of these operations are legal as long as all public deposits are not invested, and there are no interest amounts charged.

There are just two legal forms that a Swiss fintech company can take and those are either a GmbH or an AG.

• • An AG will require a down payment or capital contribution of 100,000 CHF of which 50,000 CHF will have to be done so before operation.

• • A GmbH will require a far lower 20,000 CHF capital payment, which will have to be paid up right away before operation begins.

If you need some more information on the differences between an AG and a GmbH please feel free to reach out to us, or check on our PDF here.

As you may know from the clause above, the maximum threshold for a Swiss fintech company to hold in deposits is capped to 1 million francs. If your fintech business in Switzerland reaches this amount there are a couple things to note:

The company will need to immediately notify FINMA and wait for their response and recommendations

THEN

The company will have to begin the process of applying to become an authorised and supervised financial entity.

Currently, there are 2 frameworks in Switzerland, with a third on the way. This means that the below options will dictate which way your business can operate:

An application to be supervised under the SRO and FINMA must be filled and requested

OR

An application for a banking license will need to be requested for business models which revolve around taking public deposits

OR

An application under the new Financial Innovators Service License will need to be requested which will boost the threshold from 1 million francs to 100 million francs with the condition that they hold on to at least 5% of the deposits and hold 300,000 CHF as collateral.

We hope that this has provided all of the base information you need to know before launching a Swiss fintech company. If you require some more assistance with understanding the Swiss fintech sandbox, or any other business model or legal entity, then feel free to reach out to one of the Goldblum and Partners legal team.