Switzerland’s Financial Market Supervisory Authority (FINMA), annouced new “relaxed” requirements that are applicable to innovative financial companies, such as companies in the blockchain and cryptocurrency space. Authors: Darko Stefanoski, Orkan Sahin
To boost innovative financial companies, the Swiss parliament has introduced a new FinTech license. FINMA has published guidelines for the license applications, for which innovative financial companies may apply from 2019.
Switzerland as major hub for financial technology
The Swiss FinTech landscape has evolved significantly over the past few years and Switzerland continues to be an attractive base for innovators in the financial sector. Switzerland has created – beside the sandbox – one-tailor made license category for innovative financial players. Having the back-up of the Swiss Financial Market Regulation, the door for innovative players will be easier to open than previously. The excellent conditions, combined with the clustering of innovative entrepreneurs, the proactive authorities and leading research institutes, enabled the so-called Crypto Valley to flourish. Switzerland is going forward with the goal of promoting innovation in the financial sector and to remove barriers to market entry for FinTech start-ups.
What are the benefits of the new FinTech license?
Persons pursuant to Article 1b of the Banking Act may apply for the license with relaxed requirements, such as:
- Significantly reduced minimum capital
- Substantially reduced own funds and liquidity requirements
- Reduced accounting and auditing requirements
- Waiving of the application auditor role
It allows innovative financial companies to accept public deposits of up to CHF 100 Mio. under relaxed requirements and to avoid going through the exhausting and tedious process obtaining a banking license.
What are the key requirements for the FinTech license application?
The license applications must include certain general information – as already required in the case of banking license application – about the applicants, such as the reasons for applying for such a license, as well as a description of the proposed activity and organization, including the proposed business activities, geographical scope and target clients. Information about the business premises, infrastructure and personnel also have to be included in the application.
Further, the applicants have to make sure that they meet a range of financial requirements. This means that they have to provide appropriate evidence of compliance with the minimum capital requirements.
In addition, the applicants have to inform the regulator about any changes relating to key documents (particularly the articles of association and organizational regulations), as well as changes relating to holders of qualified participations, and changes concerning the persons entrusted with the administration and management of the business.
How EY may support you
Our integrated approach is based on EY’s strategy for Switzerland’s role as an important financial center and its development as a digital hub for innovation. EY is committed to provide services and support you in your pioneer role. We are used to working together with multi-disciplinary teams on a national and international basis. Our experience in supporting clients to obtain licenses/authorizations for traditional, digital and crypto banks, securities dealers, financial market infrastructures and financial intermediaries as well as being the #1 auditor for financial market infrastructures, means that we may leverage excellent relationships with the regulators to support your FinTech license applications.