Introduction:
The Swiss Financial Market Supervisory Authority (FINMA) introduced the Distributed Ledger Technology (DLT) trading license in September 2021, a groundbreaking development in the world of cryptocurrency and security token trading. This license has been hailed as the easiest way to become a fully-fledged crypto exchange, offering unprecedented possibilities for security token trading. In this blog, we explore what this license entails, its benefits, and the significance of registering securities in the context of security token trading.
Swiss DLT Trading License:
The Swiss DLT trading license is a regulatory framework that facilitates the establishment of crypto exchanges within Switzerland. It is designed to provide a clear, accessible path for businesses looking to trade with security tokens. This license helps businesses to comply with all relevant Swiss regulations and align with the international standards for anti-money laundering (AML) and combating the financing of terrorism (CFT).
Benefits of the Swiss DLT Trading License:
- Streamlined Regulatory Process: The Swiss DLT trading license streamlines the regulatory process by offering a clear, unified framework for businesses to follow. This reduces the complexity and time required to navigate various regulatory bodies and guidelines.
- Enhanced Market Access: With the DLT trading license, businesses can operate as a fully-fledged crypto exchange, enabling the custody of a wide range of digital assets and security tokens.
- Increased Investor Confidence: The license demonstrates a commitment to regulatory compliance, enhancing investor confidence in the platform and increasing its credibility within the market.
- New Possibilities for Security Token Trading: The DLT trading license opens up new possibilities for security token trading and settlement of security token transactions, including the potential for innovative financial products and services.
Register securities:
Under Swiss law, the handling of security tokens was plagued with ambiguity. To address this issue, the Swiss regulator introduced the concept of “Uncertificated Register Securities.” These securities are functionally equivalent to traditional securities and book-entry rights. To issue these register securities, they must be recorded in a digital register and can only be transferred within that register. Consequently, transfers are executed in a legally binding and trustworthy manner exclusively on the DLT register. This development represents a significant step in adapting the legal framework to accommodate the crypto space.
The opportunity to become a Swiss-regulated DLT trading venue:
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