Until 6 February 2026, the Swiss Federal Council consulted on the introduction of a comprehensive regulatory framework for payment instrument institutions through amendments to the Financial Institutions Act. The proposed legislation, published for consultation on 22 October 2025, aims to establish Switzerland as a leading hub for stablecoin issuance while addressing perceived critical gaps in customer protection and financial stability. This contribution examines the key features of the new regulatory regime, with particular emphasis on the controversial exclusion of banks from issuing Swiss Stablecoins and the implications for Switzerland’s financial sector.
1) Background and Legislative Context
The Swiss approach to Fintech regulation has historically been characterized by technological neutrality and a principles-based framework. The introduction of the “Fintech license” under article 1b of the Swiss Banking Act in 2018 represented Switzerland’s first attempt to create a tailored regulatory category for innovative payment service providers. Switzerland‘s “DLT Act” that entered into effect in 2021 and updated existing laws to cover digital assets further contributed to legal certainty in this innovative field. However, the Federal Council’s evaluation report of 16 December 2022 still identified significant shortcomings in Switzerland‘s Fintech regulation, particularly regarding customer protection in insolvency scenarios and the CHF 100 million deposit cap that constrained business growth for article 1b-Fintech companies.
The amendments proposed to the Financial Institutions Act (FinIA) now try to respond to these deficiencies while addressing international and technological developments. The Financial Stability Board’s (FSB) recommendations on global stablecoins, the EU’s Markets in Crypto-Assets Regulation (MiCA), and the US GENIUS Act have all established regulatory precedents that Switzerland considered.
2) The New Payment Instruments Institution
a) Scope and Definition
The proposed legislation creates a new category of “payment instrument institution” (Zahlungsmittelinstitut) to replace the existing Fintech license. These institutions may accept customer funds on a professional basis, provided that they do not pay interest and invest or keep such funds in accordance with strict segregation and reserve requirements. The removal of the CHF 100 million cap for clients‘ funds enables institutions to achieve economies of scale while maintaining financial stability through proposed risk-proportionate capital buffers and requirements as to the investment and segregation of the funds (see below). This new regulatory category is designed as “separate“, i.e. outside of the Swiss regulatory pyramid. This means that – as currently proposed – Swiss banks or securities houses, who can normally perform activities as manager of collective assets, portfolio manager or trustee and under the proposal also the activities of the new “crypto-institution“, are not authorized to (also) perform the activities of a payment instrument institution.
Critically, payment instrument institutions are granted the exclusive right to issue value-stable crypto-based payment instruments (wertstabile kryptobasierte Zahlungsmittel, also called “Swiss Stablecoins“ in the Swiss ecosystem and herein) – crypto-based assets issued in Switzerland that reference a single state-issued currency, maintain value stability through prescribed reserve assets, and provide holders with a fixed redemption right. This narrow definition excludes multi-currency stablecoins and algorithmic stablecoins, which could be classified either as collective investment schemes, bank deposits or, under the new regime, “crypto-based assets with trading character“.
b) Key Regulatory Requirements
Legal Form: As proposed, payment instrument institutions must be in the legal form of a corporation (Aktiengesellschaft), partnership limited by shares (Kommanditaktiengesellschaft), or limited liability company (Gesellschaft mit beschränkter Haftung).
Permitted Activities: Payment instrument institutions can accept customer funds on a commercial basis without paying interest. In addition, they can issue Swiss Stablecoins at the nominal value of the customer funds accepted, store Swiss Stablecoins for clients under the same conditions as crypto institutions (see CapLaw-2026-03), and provide payment services.
Reserve and Segregation Requirements: Payment instrument institutions must maintain customer funds entirely separate from proprietary assets and may not use them for their own purposes. Reserves must be held as sight deposits with banks (including the Swiss National Bank) or other payment instrument institutions, or as high-quality liquid assets with short remaining maturities. The assets must be appropriately diversified, held in the currency of the redemption claims, and always equal at least the value of accepted customer funds (with negative interest, if any, deductible). Assets for Swiss Stablecoins must be held separately, and the specific requirements must be met separately, for each means of instrument issued. Further details will be regulated in the implementing ordinance.
Capital Requirements: The proposal introduces minimum capital requirements as well as progressive own funds requirements (on a stand-alone and, if applicable, consolidated basis) that increase with the volume of customer funds, balancing innovation support for smaller institutions with enhanced prudential standards for systemically important players. Again, the details will be regulated in the implementing ordinance.
Whitepaper and Disclosure Obligations: Issuers of Swiss Stablecoins must publish a comprehensive whitepaper containing material information for potential acquirers, including details about the issuer, the rights, risks and obligations of the holders, the underlying technology, reserve custody arrangements, and anti-money laundering measures. The whitepaper must be submitted to FINMA at least 60 days before initial issuance, and FINMA maintains a public register of all issued Swiss Stablecoins. The term “whitepaper“ is a bit of a misnomer as it resembles more of a prospectus under the Financial Services Act (including with respect to its exemptions) than a traditional whitepaper prepared in the context of cryptocurrencies.
Anti-Money Laundering Obligations: As proposed, payment instrument institutions will qualify as financial intermediaries pursuant to the Swiss Federal Act on Combating Money Laundering and Terrorist Financing (AMLA) and must, amongst others, meet the verification, documentation, organizational, reporting and termination requirements under the AMLA at the time of issuance and redemption of the Swiss Stablecoins. The proposed revisions to the AMLA set-forth further duties, including the duty to either (i) ensure that all holders of Swiss Stablecoins (including in secondary market transactions) are identified or (ii) have a blacklist for wallets from and to which transactions with the Swiss Stablecoins are excluded.
Redemption Rights: Holders of Swiss Stablecoins have an unconditional right to redeem at par value at any time. Redemption must then occur within a short timeframe, with detailed modalities to be specified by the Federal Council in the implementing ordinance.
Insolvency Protection: In the event of bankruptcy, reserve assets are segregated for the benefit of customers or holders of Swiss Stablecoins, respectively, and liquidated separately. Customers have a pro-rata claim to the liquidated assets, with any surplus falling into the bankruptcy estate. This represents a fundamental improvement over the existing Fintech license regime, where customer deposits were treated as unsecured claims.
Foreign control: Foreign controlled payment instrument institutions would be subject to the provisions of the Banking Act on foreign-controlled banks (mutatis mutandis). This means that they have to obtain an additional license, which is granted if certain requirements are met (see CapLaw-2024-85 at 3)(a)).
3) Critical Analysis: The Exclusion of Banks
a) The Regulatory Barrier
Perhaps the most controversial aspect of the proposed legislation is the strict separation between banking activities and payment instrument institution activities regarding the issuance of Swiss Stablecoins. The current draft article 12a(1) FinIA explicitly restricts issuance to licensed payment instrument institutions, effectively prohibiting banks from issuing these instruments directly.
This exclusion extends beyond direct issuance. The explanatory report can be understood to suggest that banks may also be precluded from providing parallel redemption obligations for Swiss Stablecoins issued by other entities, creating significant obstacles for distributor models where banks would facilitate the circulation and redemption of stablecoins issued by regulated subsidiaries or partner institutions.
b) Rationale and Justification
The Federal Council’s explanatory report offers limited justification for this exclusion, citing primarily “practical implementation problems.” The underlying concern appears to be that applying payment instrument institution requirements to banks would create regulatory complexity, particularly regarding the segregation and insolvency treatment of assets related to Swiss Stablecoins.
The report notes that unlike payment instrument institutions, which hold few assets beyond customer reserves, banks maintain diversified balance sheets. Applying strict segregation requirements to bank-issued Swiss Stablecoins could constrain credit provision to the real economy and interfere with monetary policy transmission. The proposal therefore suggests that bank-issued Swiss Stablecoins should be treated analogously to traditional deposits, protected by banking capital requirements rather than asset segregation.
c) Fundamental Concerns
This regulatory approach raises several critical concerns that merit careful consideration:
Swiss banks have been the cornerstone of the payment system for decades. The operation of interest-bearing giro accounts is reserved to banks, and payment services are designated as a systemically important banking function under article 8(1) of the Banking Act. Major payment innovations – from the Swiss Interbank Clearing (SIC) system to TWINT – Switzerland’s leading payment app – have been developed and operated by banks.
Excluding banks from the issuance of Swiss Stablecoins contradicts their traditional role as gatekeepers for safe and efficient payment services, regardless of technological implementation. It also ignores the tradition of “same business, same risks, same rules”. This creates an artificial distinction between traditional electronic money and tokenized payment instruments that perform economically identical functions.
The prohibition also creates significant competitive distortions. Non-bank payment token institutions benefit from tailored regulation and relaxed anti-money laundering requirements (particularly regarding the identification of holders in secondary market transactions), while banks face the full weight of banking regulation and traditional AML obligations.
This asymmetry may lead to two undesirable outcomes: either (a) the issuance of Swiss Stablecoins remains underutilized, with demand for CHF stablecoins met by foreign issuers (particularly from the US) operating outside Swiss regulatory oversight, or (b) a parallel payment infrastructure develops outside the established banking system, with difficult-to-assess systemic risks.
A more nuanced approach should be considered. Such an approach would also find support in international practice. The EU’s MiCA regulation permits credit institutions to issue e-money tokens without requiring segregation of reserve assets, recognizing that banking prudential requirements provide equivalent protection. The US GENIUS Act similarly permits banks to issue payment stablecoins through licensed subsidiaries, with appropriate regulatory oversight.
4) Conclusion
Switzerland’s proposed regulation of payment instrument institutions represents a step forward in creating legal certainty for stablecoin issuance and enhancing customer protection. The framework aligns with international standards while maintaining Switzerland’s tradition of innovation-friendly regulation.
However, by mirroring the EU legislation in a significant way, the proposal seems to miss an opportunity for incentivizing further innovation within Switzerland. Some market participants may, therefore, chose to establish a MiCAR-regulated entity in the EU and to service the Swiss market on a mere cross-border basis. Moreover, the strict exclusion of banks from the issuance of Swiss Stablecoins raises fundamental questions about regulatory coherence, competitive neutrality, and practical viability. Banks’ traditional role in the Swiss payment system, their robust prudential regulation, and their operational capabilities make them natural participants in the tokenized payment ecosystem.
The consultation process that ended on 6 February 2026 provided an important opportunity for stakeholders to contribute to refining the framework. The ultimate success of Switzerland’s stablecoin regulation will depend not only on the technical quality of the rules but also on their practical workability and their ability to foster a vibrant, secure, and internationally competitive digital asset ecosystem.
Benjamin Leisinger (benjamin.leisinger@homburger.ch)
Fabrice Eckert (fabrice.eckert@homburger.ch)