Switzerland is a popular European jurisdiction for crypto businesses. Switzerland may be a promising choice if you are looking for a transparent regulatory framework, an active crypto community, and a favorable tax regime for your licensed crypto business. The experts from Gofaizen & Sherle are always ready to assist in registering a cryptocurrency company and obtaining a license for cryptocurrency activities in this country
Many people know the stereotype about the conservativeness of the Swiss banking system. However, in 2013, the first cryptocurrency companies appeared here, and the Crypto Valley Association in the canton of Zug is now recognized as the world's leading center for the development of blockchain technologies and an ideal hub for crypto startups and ICOs.
Cryptocurrency and blockchain projects are regulated by the Swiss Financial Market Supervisory Authority (FINMA), which develops guidelines for various types of crypto projects to help them comply with applicable laws. Among other duties, FINMA issues licenses for cryptocurrency activities and monitors compliance with the Financial Market Laws governing anti-money laundering. In 2018, the FINMA body established a cooperation with the Swiss State Secretariat for International Finance (SIF) to develop blockchain projects and submit changes to existing legislation.
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Fintech projects have full legal status but are required to obtain a crypto license in Switzerland to operate within the law. Cryptocurrencies are perceived by the Swiss Federal Tax Administration (FTA) as assets that can be legally exchanged and used for a variety of commercial transactions.
Cryptocurrency projects that utilize blockchain technology for innovative purposes can benefit from the support and guidance of the Swiss government and regulatory authorities. Switzerland has developed several initiatives to promote the crypto industry, such as:
FINMA is known for its crackdown on scam cryptocurrency providers. It has already shut down at least four suspicious companies, among which was one that offered electronic coins stored on the company's servers instead of using blockchain. Some other companies are still under investigation.
The Federal Council is still aware of the risks associated with cryptocurrency trading, but registering a cryptocurrency exchange in Switzerland is not a difficult task. This country recognizes the potential of blockchain technology and strives to create the best environment for innovation.
Obtaining a cryptocurrency license in Switzerland has several advantages:
1. Legal clarity and regulatory stability
Crypto regulation in Switzerland is already well-established and no changes are foreseen for the next 5+ years. Obtaining a cryptocurrency exchange license from FINMA ensures that your cryptocurrency exchange operates within a clear legal framework and creates trust among users and investors.
2. Better financial infrastructure
There are great opportunities for Swiss crypto companies, as Switzerland already has several crypto-friendly banks and payment institutions that are willing to open a cryptocurrency account. According to a recent survey, more than 55% of Swiss banks intend to introduce digital asset services within the next 1-3 years.
3. Reputable company image
Switzerland has a strong reputation for financial stability, security, and innovation. Operating under a Swiss license can have a positive impact on your exchange's global reputation.
4. A tiered tax system with the option of choosing the most suitable canton
Switzerland has a three-tier income tax system: at the federal level (same rate throughout Switzerland), at the cantonal level (same rate within a certain canton), and the municipal level. The federal income tax rate is 8.5%, while the cantonal tax rate ranges from 11.9% to 21%.
5. Influential blockchain community
Switzerland is home to many cryptocurrency companies. According to the Fintechnews Switzerland 2022 report, Crypto Valley confirms its status as the most mature global blockchain center. The 50 largest crypto companies, including AllianceBlock, Bancor, and Cardano, are based here.
6. Innovation-friendly environment and government support for fintech companies
Switzerland is one of the world's leading financial technology centers. The Federal Council strategically supports fintech companies by taking legal steps to stimulate innovation and remove barriers to market access. In addition, initiatives have been presented to improve the general environment for new technologies such as distributed ledger technology (DLT) and blockchain.
7. Diversity of trade and services thanks to the Swiss crypto license
The Swiss license for a cryptocurrency exchange allows for a wide range of trading pairs and services, making the platform more attractive for traders.
Registration of VASP with complete infrastructure, local office, and accounting services
24 400 CHF
Initial set up
Registration of VASP under the full regulatory requirements and appointment of required local employees and local office
20 700 CHF
Initial set up
Registration of VASP under the minimum regulatory requirements
14 650 CHF
Initial set up
The requirements for a crypto license in Switzerland depend on the type of license and the activities and services of the crypto business. Some of the common requirements are:
Cryptocurrency businesses must also cooperate with FINMA and other authorities.
In Switzerland, various crypto licenses can be obtained to conduct legal cryptocurrency business. The license protects both the project team and clients, contributing to a safe environment for cryptocurrency business.
FINMA identifies the main types of licenses:
Obtaining these licenses requires meeting certain regulatory requirements, including anti-money laundering and customer due diligence procedures, financial strength, and compliance with Swiss law.
To register a cryptocurrency company in Switzerland, you need to submit a list of documents, which depends on the type of company you want to register. As a rule, the list of documents includes:
This is only a general list of documents and specific requirements may vary depending on the region, type of company, and activities. To avoid misunderstandings and mistakes, it is recommended to work with Gofaizen & Sherle legal experts specializing in company registration and licensing in Switzerland.
The very process of founding a crypto company in Switzerland includes the following steps:
Once the application for company formation has been processed, the Commercial Registry will publish the company's details in the Swiss Commercial Registry.
It is important to keep in mind that administrative requirements and regulations depend on the nature of each company's crypto activities. It is therefore advisable to clearly define the scope of crypto operations before the company formation process begins.
Switzerland is characterized by a friendly and open attitude towards cryptocurrencies and blockchain technology. The country does not have a separate, specific law on cryptocurrencies, and an existing legal framework is used to regulate various aspects of the cryptocurrency industry.
The key piece of legislation in Switzerland that defines the framework for cryptocurrency transactions in the country is the DLT Act. This law regulates:
Also, the DLT Act establishes the financial infrastructure for cryptocurrency trading and procedures in case of bankruptcy.
The DLT Act defines the Swiss National Bank as the guarantor of the sustainability of the financial market infrastructure. According to the Financial Market Infrastructure Act, this body is tasked with supervising financial market entities, including:
At the request of the Swiss National Bank, each regulated company is required to provide all necessary information and documentation to identify risks that could undermine the stability of the financial market system.
Under the Anti-Money Laundering Act (AMLA), cryptocurrency exchange operators, brokers, and custodians are subject to regulation as financial intermediaries. Their activities require registration with FINMA and strict adherence to comprehensive due diligence and reporting obligations.
Cryptocurrency projects that issue tokens through initial coin offerings (ICOs) or initial token offerings (ITOs) are subject to different regulatory rules that depend on the characteristics and functionality of those tokens. FINMA classifies tokens into three categories:
Each of these categories has different legal implications in terms of securities law, civil law, and tax regulations. It should be noted that even if payment tokens are not recognized as legal tender, FINMA does not classify them as securities, as their primary purpose is to be used as a means of payment.
|License obtainment timeline||2-3 months|
|State fee for application||approx. 2 000 CHF|
|Required share capital||20 000 CHF (LLC); 100 000 CHF (LTD)|
|Corporate income tax||11.9% to 21%;|
|Annual supervision fee||approx. 3 500 CHF|
|Local staff member||AMLO, Director|
|Sustainability||Stable Regulatory Regime for at least 5+ years|
|Bank account options||Local crypto-friendly Banks, EMIs|
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In Switzerland, every company whose annual revenue exceeds 500,000 Swiss francs (about $565,272) is required to prepare financial statements. Cryptocurrency companies have the option of filing their reports either in Swiss francs or in their primary currency. In addition, reports can be in one of the official languages of Switzerland or English. It is important to retain signed paper copies of annual reports and audit reports for 10 years.
Depending on the size of the company and the scope of its operations, there are different levels of audit. A fee of approximately CHF 4,500 (or about US$5,087) is usually charged for an annual standard audit.
A standard audit is mandatory if the company exceeds two of the following criteria for two consecutive fiscal years:
If a company does not meet at least two of the above criteria, it is recommended to have a limited audit.
A Swiss company may be fully exempted from an audit if:
In addition to financial statements and audits, all cryptocurrency licensees must be prepared to provide detailed reports to supervisory authorities by anti-money laundering (AML) measures. These reports are necessary to demonstrate the maintenance of lawfulness throughout their economic activities.
Determining the tax treatment of cryptocurrency companies depends on the nature and purpose of their economic activity. Generally, cryptocurrencies are not treated as ordinary money, but as assets. As a result, most cryptocurrencies are subject to asset tax laws.
An additional important factor is tax residency status. Individuals with tax residency are required to pay taxes on income earned anywhere in the world. Non-resident companies are only liable to pay taxes on income earned in Switzerland.
The tax system in Switzerland has a tiered structure, as tax administration functions are divided between the FTA, cantons, and municipalities. Federal tax rates generally remain stable, while cantonal tax rates are set annually and published on the official websites of each canton. Although taxation systems may vary from location to location, the tax year usually coincides with the reporting fiscal year.
Most cryptocurrency license holders are required to pay the following taxes at the federal, cantonal, and municipal levels:
Corporate income tax (CIT) is levied at all three levels. The federal CIT rate is 8.5% of profits after tax deductions. As different cantons and municipalities have different taxation systems, the cantonal and municipal CIT rates can differ significantly.
Capital Gains Tax (CGT) is levied at the cantonal level only on certain income derived from certain cryptocurrency activities. It is important to note that:
Transactions such as the exchange and use of payment tokens are exempt from VAT. This is because this category of cryptocurrencies is recognized as a means of payment and is therefore considered similar to traditional currency. All commissions and fees associated with such transactions are considered financial service fees and are not subject to VAT.
Switzerland has approximately 100 international double taxation treaties, which allow taxpayers to protect their income earned abroad from double taxation. In addition, if certain conditions are met, companies with foreign business are entitled to tax exemptions at cantonal and municipal levels and are taxed at rates ranging from 7.83% to 11% on foreign-sourced profits.
Yes, you may need a license from the Swiss Financial Market Authority to trade cryptocurrency in Switzerland. Here are some scenarios that may require licensing:
It is important to note that licensing requirements may vary depending on factors such as the scale of your operations, the services you provide, and the types of cryptocurrencies you handle.
The cost of a cryptocurrency license in Switzerland depends on the type of license you are applying for, the size and legal form of your company, and other factors. The cost may include:
In general, the total cost of registering a company and obtaining a cryptocurrency license in Switzerland can range from CHF 20,000 or more.
The validity of a cryptocurrency license in Switzerland depends on the type of license you have been granted. For example:
The specific duration of your license will be specified in the license agreement you sign with FINMA.
To date, Switzerland has not established a specific license for ICOs but has guided how to approach ICOs under the existing legal structure. In 2018 FINMA published guidelines that categorized tokens into three categories, with different regulatory requirements for each category:
It is important to note that the Swiss regulatory framework for ICOs is still evolving and specific requirements may change over time. It is therefore advisable to consult a lawyer or other financial advisor for more information on the specific requirements for your ICO.
To obtain a license to conduct activities with cryptocurrencies, you need to:
Coordination with FINMA is important in the licensing process to ensure that the paperwork and application are correct.