Switzerland took a step in integrating blockchain in its financial market. The financial regulator of the country, the Financial Market Supervision Authority (Finma), granted his first license for a distributed trade facility for Ledger Technology (DLT).
According to the announcement of the platform, BX Digital AG, a subsidiary of BX Swiss AG and part of the Boerse Stuttgart Group, will exploit the newly approved platform.
“As part of the license process, Finma has also clarified important underlying issues and required a strategy to guarantee Business Continuity (BCM), also with regard to the settlement infrastructure based on a public blockchain,” Finma wrote.
“To limit operational risks, the financial market regulations require that the operator carries out technical checks of the technology used, such as checking the source code used by smart contracts.”
A milestone for digital securities trade
The BX Digital platform makes multilateral trade of DLT effects possible, so that a breakthrough is marked in regulated blockchain-based trade.
The approval, issued under the Financial Market Infrastructure Act (Finmia), enables BX Digital to offer a legally conforming marketplace for institutional participants, mainly banks. However, the platform will not offer guardianship services for DLT effects.
BX Digital has applied for a small-scale DLT trade facility permit, which adhere to specific thresholds described in the Regulation to the Financial Market Supervision Act (Finmio). This classification ensures legal flexibility and ensures operational integrity.
The DLT law of Switzerland, which came into force on 1 August 2021, laid the foundation for the regulation of blockchain-based financial services. The law aims to balance technological innovation with financial stability and safety.
The legal framework behind the approval
By integrating DLT into the existing financial market infrastructure, Switzerland continues to position itself as a world leader in digital finances.
As part of the license process, Finma is obliged strict operational guarantees, including a Business Continuity Management (BCM) strategy. The regulator also required technical audits of the technology used, such as verifying smart contract bron codes, to reduce risks related to blockchain activities.
The trade facility of BX Digital uses 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 is intended to guarantee better transactions for delivery-versus payment (DVP) through smart contracts. When a DLT security is transferred to the blockchain, the corresponding payment is automatically carried out via the SIC system.