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 platform’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.
