Switzerland took a step in integrating blockchain into
its financial market. The country’s financial regulator, the Financial Market
Supervisory Authority (FINMA), granted its first license for a distributed
ledger technology (DLT) trading facility.
According to the regulator’s announcement, BX Digital
AG, a subsidiary of BX Swiss AG and part of the Boerse Stuttgart Group, will
operate the newly approved platform.
“As part of the licensing process, FINMA also
clarified important underlying issues and required a strategy to ensure
business continuity (BCM), including with regard to the settlement
infrastructure based on a public blockchain ,” FINMA wrote.
“To limit operational risks, financial market
regulation requires the operator to carry out technical checks of the
technology used, such as checking the source code used by smart contracts.”
A Milestone for Digital Securities Trading
BX Digital’s platform enables multilateral trading of
DLT securities, marking a breakthrough in regulated blockchain-based trading.
The approval, issued under the Financial Market
Infrastructure Act (FinMIA), allows BX Digital to provide a legally compliant
marketplace for institutional participants, mainly banks. However, the platform
will not offer custody services for DLT securities.
BX Digital applied for a small-scale DLT trading
facility license, adhering to specific thresholds outlined in the Ordinance to
the Financial Market Supervision Act (FinMIO). This classification allows for
regulatory flexibility while ensuring operational integrity.
Switzerland’s DLT Act, which came into effect on
August 1, 2021, laid the foundation for the regulation of blockchain-based
financial services. The law aims to balance technological innovation with
financial stability and security.
The Legal Framework Behind the Approval
By integrating DLT into the existing financial market
infrastructure, Switzerland continues to position itself as a global leader in
digital finance.
As part of the licensing process, FINMA mandated
stringent operational safeguards, including a business continuity management
(BCM) strategy. The regulator also required technical audits of the technology
used, such as verifying the smart contract source codes, to mitigate risks
associated with blockchain operations.
BX Digital’s trading facility utilizes the Ethereum
public blockchain for settlement. To streamline payment processing, the
platform is connected to the Swiss Interbank Clearing (SIC) system, operated on
behalf of the Swiss National Bank.
This integration aims to ensure better delivery-versus-payment
(DvP) transactions through smart contracts. When a DLT security is transferred
on the blockchain, the corresponding payment is automatically executed via the
SIC system.
Switzerland took a step in integrating blockchain into
its financial market. The country’s financial regulator, the Financial Market
Supervisory Authority (FINMA), granted its first license for a distributed
ledger technology (DLT) trading facility.
According to the regulator’s announcement, BX Digital
AG, a subsidiary of BX Swiss AG and part of the Boerse Stuttgart Group, will
operate the newly approved platform.
“As part of the licensing process, FINMA also
clarified important underlying issues and required a strategy to ensure
business continuity (BCM), including with regard to the settlement
infrastructure based on a public blockchain ,” FINMA wrote.
“To limit operational risks, financial market
regulation requires the operator to carry out technical checks of the
technology used, such as checking the source code used by smart contracts.”
A Milestone for Digital Securities Trading
BX Digital’s platform enables multilateral trading of
DLT securities, marking a breakthrough in regulated blockchain-based trading.
The approval, issued under the Financial Market
Infrastructure Act (FinMIA), allows BX Digital to provide a legally compliant
marketplace for institutional participants, mainly banks. However, the platform
will not offer custody services for DLT securities.
BX Digital applied for a small-scale DLT trading
facility license, adhering to specific thresholds outlined in the Ordinance to
the Financial Market Supervision Act (FinMIO). This classification allows for
regulatory flexibility while ensuring operational integrity.
Switzerland’s DLT Act, which came into effect on
August 1, 2021, laid the foundation for the regulation of blockchain-based
financial services. The law aims to balance technological innovation with
financial stability and security.
The Legal Framework Behind the Approval
By integrating DLT into the existing financial market
infrastructure, Switzerland continues to position itself as a global leader in
digital finance.
As part of the licensing process, FINMA mandated
stringent operational safeguards, including a business continuity management
(BCM) strategy. The regulator also required technical audits of the technology
used, such as verifying the smart contract source codes, to mitigate risks
associated with blockchain operations.
BX Digital’s trading facility utilizes the Ethereum
public blockchain for settlement. To streamline payment processing, the
platform is connected to the Swiss Interbank Clearing (SIC) system, operated on
behalf of the Swiss National Bank.
This integration aims to ensure better delivery-versus-payment
(DvP) transactions through smart contracts. When a DLT security is transferred
on the blockchain, the corresponding payment is automatically executed via the
SIC system.
This post is originally published on FINANCEMAGNATES.
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