Obaining a FinTech License in Switzerland?

Guide to Obtaining a Fintech License in Switzerland

The Fintech industry in Switzerland continues to grow dynamically and has become one of the top providers of digital tech solutions for the nation’s finance sector. In 2020, there were 405 Fintech companies operating in the country – which is 23 more than in the previous year. To promote innovation in the financial sector and break down the barriers to market entry for Fintech startups, the Fintech license in Switzerland with simplified requirements introduced by the Swiss parliament.

Overview of a Swiss Fintech license

Pursuant to the new framework, institutions operating in the financial sector (Trading platforms for virtual currencies, Electronic Money Businesses, etc.), receiving deposits from the public up to CHF 100 million or crypto-based assets and neither investing these deposits nor paying any interest will benefit from the new Fintech license.  To obtain authorization based on Article 1b Bank Act, the institution must provide that they comply with the legal requirements: an applicant shall incorporate a company limited by shares, a ULC, or an LLC conducting its business activities from a registered office in Switzerland.

The Fintech license granted in Switzerland’s independent financial-markets regulation body, FINMA. Upon receipt of the application, FINMA estimates whether the business activities fall under special requirements for which the institution will need to obtain a license and whether the provision of business activities allowed by the Fintech license.

After receipt of the application, FINMA will notify the applicant which FINMA staff is in charge of a licensing procedure and whether any other information or documentation needs to be provided. A licensing body may request an audit report from the applicant as part of the licensing procedure if necessary. The review period takes approximately 6 months.

Main requirements to be met for granting the Fintech license in Switzerland

• FinTech license applicant has to have the amount of CHF 300’000 fully paid-in capital.
• Applicants must submit a comprehensive overview of the company’s activities and business plan complemented with a budget overview and providing that capital adequacy ratio, risk management and liquidity regulations can guarantee;
• The provision of a partnership agreement, articles of incorporation, or regulations;
• Business ethics should guaranteed by qualified management members;
• The office must be registered in Switzerland;
• The institution must establish a robust and effective internal control and audit system, as well as risk management.

Costs and timeframe of the Fintech license

As the banking license, the Fintech license entails certain requirements in terms of capital.

Based on art. 1b BA the initial capital should be at least CHF 300,000 up to a float (public deposit received) of 10,000,000 CHF.

Other capital requirements worth mentioning determine that the capital must be:

• completely paid-in,
• retained at any time,
• used only for the purpose of the company,
• cannot be borrowed or invested.

The process will take approximately 6 months.

May the company operate while applying for the license?

FINMA allows conducting the business activity while the application processed.

Conclusion

The concept of a Fintech license in Switzerland a balanced and principle-based approach to pursuing a flexible pathway boosting innovation. Such well-developed and risk-based Fintech regulation provides certainty and advances the attractiveness of Switzerland as a center for financial business. Efficient taxation models, well-established infrastructure, and a broad talent pool further all help make Switzerland a preferable location for Fintech companies.

The Fintech license gives financial companies an alternative to a banking license and, due to the relaxed requirements, facilitates the process of entrance to the Swiss financial market.

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