Federal Council enacts new fintech regulations

As of August 1, 2017, the amended Banking Ordinance will come into force. The purpose of this amendment is to reduce the market entry barriers for fintech entrepreneurs. Additionally, this should also strengthen the competitiveness of the financial center Switzerland.

The Changes

‍With the new regulations, special assistance is intended for fintech companies that operate outside of the typical banking business. With the new rules, these companies will be regulated according to their risk potential. To achieve this, the Banking Ordinance (BankV) was revised. This leads to two particular facilitations:

1. According to the current BankV, there is a deadline of 7 days for the exception for the acceptance of funds for settlement purposes. This period will now be extended to 60 days.
2. Furthermore, an innovation space is being created: accepting deposits from the public up to CHF 1 million will no longer be considered commercial. This will allow operations without a permit up to this amount in the future. The aim is to give companies the opportunity to test a business model before they have to apply for a permit for public deposits over CHF 1 million. However, the company must explicitly make the depositors aware that the deposits are not secured by the deposit insurance.

These changes benefit not only fintech companies. Existing financial service providers can also profit from them. This ensures that there will be no competitive distortions.

‍Upcoming Changes

‍A further change is expected in the Banking Act (BankG). For companies that accept public deposits up to a maximum of CHF 100 million without investing or paying interest on the funds, a new licensing category is to be created in the BankG. This new category is expected to have eased licensing and operational requirements compared to the current banking license in the areas of accounting, auditing, and deposit insurance. The Council of States has already spoken out in favor of this change in December 2016. The discussion in the National Council is expected to take place this fall.