FinTech dossier

A list of the crypto services that have appeared on the market to date. In terms of supervisory law, the focus is on the risk-adequate treatment of these services. It is always important to achieve the right balance between openness to innovation and the protection the financial market and investors.

FINMA is increasingly using technology-supported and data-driven applications in its supervisory activities and is increasing its efficiency by digitalising processes. It actively addresses new developments in the financial market and assesses innovative business models in a risk-based and technology-neutral manner.

FINMA processes a large number of enquiries on the topics of distributed ledger technology and blockchain every year. Between 2021 and 2024, it was able to reduce the average number of days it took to respond to an enquiry from 141 to 25 – a reduction of 82%.

The Swiss financial centre has maintained a high level of innovation activity. Numerous enquiries both from supervised institutions with innovative expansions to their business models and from new players wishing to enter the market are evidence of this. FINMA once again responded swiftly and professionally to enquiries in this connection in 2023.

Artificial intelligence (AI) is being steadily adopted in the financial market, particularly to support internal processes, but also in risk management, pricing, and customer interaction. The autonomy and complexity of AI systems entail various risks.

The importance of artificial intelligence (AI) has grown rapidly in all areas of life, including the financial market, in recent years. In accordance with its strategic objectives for the years 2021 to 2024, FINMA supports innovation in the Swiss financial centre and monitors the associated risks.

Applications in decentralized finance, or DiFi for short, have attracted much attention in recent years. The initiators of such projects take the view that DeFi can structurally and fundamentally change the financial market.

Technological innovation is also opening up a wide range of opportunities for new and enhanced processes and business models in the financial markets. FINMA actively monitored these innovations in 2021 in order to offer financial institutions modern regulatory conditions adapted to the technological possibilities.

Many projects submitted enquiries to FINMA from the emerging area of “decentralised finance” in the year under review. This term describes a new form of openly accessible financial services.

The area of “artificial intelligence” (AI) and in particular “machine learning” has seen spectacular progress in the last decade.

The potential for technological innovation in financial markets is significant. FINMA actively contributed to shaping the regulatory conditions for innovative technologies, particularly distributed ledger technology, in the year under review.

In the past few years, a key priority for FINMA has been dealing with enquiries in connection with FinTech-based business models. In 2020 alone it conducted around 100 preliminary investigations in this context. A substantial driver for this was the large number of initial coin offerings (ICOs) in Switzerland.

FINMA responded to the numerous enquiries concerning “stable coins” ­projects with a supplement to its initial coin offerings guidelines. The FinTech licence has meanwhile also been attracting interest.

FINMA received a large number of FinTech queries during the reporting year. The guidelines for initial coin offerings (ICOs) published on 16 February 2018 were very well received on a national and international level.

Blockchain was the dominant topic in 2017 and the subject of a FINMA roundtable discussion in May. Two events of regulatory significance were the introduction of a sandbox and the expost review of FINMA Circular 2016/7 “Video
and online identification”.

Since 2013, FINMA has been paying close attention to the challenges arising from new technological developments in finance (FinTech) regarding licensing requirements, supervision and regulation. FINMA revised one circular and issued another to enable video and online identification and the digital conclusion of asset management agreements.

FINMA is helping improve conditions promoting innovation in financial technology and digitalisation. It is taking steps to lower barriers to competition and promote technology-neutral regulation. It is also creating centralised access to information for start-ups.