Switzerland’s Next Step in Fintech and Crypto Regulation: New Categories for Payment Instrument Institutions and Crypto Institutions

The Need for a Tailored Framework 

The rapid evolution of digital finance has exposed gaps in Switzerland’s existing regulatory regime. Until now, stablecoins – tokens pegged to the value of one or more underlying assets – have been assessed under existing financial market laws, often resulting in either over-regulation (e.g., requiring a full banking license) or regulatory blind spots. Meanwhile, the fintech license introduced in 2018, though innovative, has shown weaknesses, particularly regarding customer protection in bankruptcy scenarios and growth limitations due to a CHF 100 million deposit cap.  

Internationally, major jurisdictions such as the EU, UK, and US have brought stablecoins and crypto asset services under strict regulatory oversight. To remain competitive and credible, Switzerland is now proposing a bespoke regime that aligns with global standards, notably those of the Financial Stability Board and the EU’s MiCA regulation.   

The Core of the Proposal: Two New License Categories 

Against this backdrop, the Federal Council is proposing two new license categories: 

1. Payment Instrument Institution

• Replacing the fintech license: The new category will replace the existing fintech license, allowing institutions to accept customer funds without engaging in lending or interest payments. 

• Stablecoin issuance: Only licensed payment instrument institutions will be permitted to issue a special type of stablecoin (i.e. crypto-based assets that are issued in Switzerland and aimed to maintain a stable value in relation to a single Fiat currency), which must be fully backed, segregated from the issuer’s assets, and redeemable at par value. The payment instrument institution must further publish a whitepaper.  

• No deposit cap: The previous CHF 100 million limit is abolished, enabling institutions to grow and take advantage of economies of scale.  

• Enhanced customer protection: In case of bankruptcy, customer funds are segregated and not part of the bankruptcy estate, a significant improvement over the previous regime. 

• AML/CFT compliance: Payment instrument institutions are classified as financial intermediaries and must comply with Swiss anti-money laundering (AML) and counter-terrorism financing (CFT) laws, including specific obligations for stablecoin issuance and redemption (but now reduced duties in connection with secondary market transactions, such as blacklisting).  

2. Crypto Institutions

• Scope: This new license covers entities providing custody, trading, and certain other services involving payment tokens (such as Bitcoin and non-Swiss stablecoins), excluding utility tokens, asset tokens and stablecoins issued by payment instrument institutions. 

• Regulatory alignment: Licensing and activity requirements are modelled on those for securities firms but are less extensive, reflecting the different risk profile of crypto asset services. Rules on custody are based on existing provisions in the Banking Act. Licensed banks and securities firms do not require an additional license as crypto institutions.  

• Whitepaper requirement: Public offerings or listings of such payment tokens must be accompanied by a detailed whitepaper, enhancing transparency and investor protection. 

• Market integrity and customer protection: Selected provisions of the Financial Services Act apply, including rules on client information, suitability and appropriateness checks, transparency, due diligence and organisational requirements to prevent conflicts of interest and market abuse. 

• AML/CFT compliance: Crypto institutions are classified as financial intermediaries and must comply with Swiss AML and CFT laws. 

International Context and Innovation 

The Swiss approach is closely aligned with international regulatory developments. For example, the EU’s MiCA regulation and the US GENIUS Act both require stablecoins to be fully backed, segregated, and subject to clear redemption rights. Switzerland’s proposal also introduces progressive capital requirements and mandates recovery and resolution planning for significant payment instrument institutions, mirroring global trends.  

Importantly, the regime allows for innovation: exceptions and regulatory “sandboxes” are foreseen for start-ups and pilot projects, and the framework is designed to be technology-neutral and adaptable to future developments. 

Implications for the Swiss Market 

• For fintechs and start-ups: The new categories offer a clearer, more attractive path to market, with improved legal certainty, customer confidence and growth potential.  

• For banks and other financial institutions: While facing increased competition from payment instrument institutions and crypto institutions, they benefit from a level playing field and new opportunities to integrate regulated stablecoins and crypto services. 

• For customers: Enhanced protection, transparency, and a broader range of trustworthy crypto based products. 

• For Switzerland: The reform cements Switzerland’s reputation as a forward-thinking, credible, and internationally aligned financial center. 

Conclusion 

Switzerland’s proposed reform marks a decisive step toward a modern, innovation-friendly, and robust regulatory environment for fintech businesses, stablecoins and crypto assets service providers. By introducing dedicated license categories, enhancing customer protection, and aligning with international standards, the country is poised to remain at the forefront of digital finance and innovation – balancing opportunity with responsibility.