Federal Council enacts new fintech regulations

The amended Banking Ordinance will come into force on August 1, 2017. The aim of this amendment is to reduce market entry barriers for fintech entrepreneurs. It is also intended to strengthen the competitiveness of Switzerland as a financial center.

The changes

The new regulations are intended to help fintech companies in particular that operate outside the typical banking business. Under the new regulations, these companies will in future be regulated in line with their risk potential. To achieve this, the Banking Ordinance (BankV) has been revised. This leads to two major simplifications in particular:

1. Under the current BankV, the exception for accepting funds for settlement purposes is subject to a seven-day time limit. This time limit will now be extended to 60 days.
2. In addition, an innovation space will be created: in future, accepting public deposits of up to CHF 1 million will no longer be considered commercial activity. This means that deposits up to this amount will be possible without a license. The aim is to give companies the opportunity to test a business model before they have to apply for a license for public deposits exceeding CHF 1 million. However, the company must expressly inform depositors that the deposits are not covered by deposit insurance.

These changes will not only benefit fintech companies. Existing financial service providers can also benefit from them. This will ensure that there is no distortion of competition.

‍Upcoming changes

‍A further amendment is expected to the Banking Act (BankG). A new licensing category is to be created in the BankG for companies that accept public deposits of up to CHF 100 million without investing or paying interest on the funds. Compared to the current banking license, this new category will be subject to less stringent licensing and operating requirements in the areas of accounting, auditing, and deposit protection. The Council of States already voted in favor of this change in December 2016. The National Council is expected to discuss the matter this fall.