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Virtual and cryptocurrencies—regulatory and anti-money laundering approaches in the European Union and in Switzerland

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Abstract

Cryptocurrencies and virtual currencies gained prominence in 2017 and 2018. The European Union has closely observed developments but has not been proactive in regulating this new phenomenon. In the Fifth Anti-Money Laundering Directive, a definition of virtual currencies was introduced to EU law for the first time. Reports published by the European Securities and Markets Authority and by the European Banking Authority, both in 2019, provide further clarification on the approach being taken at EU level. Switzerland has been at the forefront of crypto developments. The Swiss approach to regulating the crypto world is different from the approach taken e.g., in Malta and Liechtenstein and may serve as an additional inspiration for EU regulators.

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Notes

  1. Küfner [10], p. 49.

  2. History of bitcoin [9], with further references.

  3. Loc. cit.

  4. Schweizerische Eidgenossenschaft [14], p. 47.

  5. Eidgenössische Finanzmarktaufsicht [5], p. 3.

  6. Directive [4], Art. 3 (18).

  7. Eidgenössische Finanzmarktaufsicht [5], p. 3.

  8. Bank for International Settlements [2], pp. 91–109.

  9. Loc. cit., p. 95.

  10. Loc. cit., p. 101ss.

  11. OECD [11].

  12. FATF [12], with further references.

  13. Bank for International Settlements [2], pp. 107–109.

  14. Securities and Markets Stakeholder Group [15] p. 6.

  15. Balzli [1], p. 444.

  16. Directive [4], recitals 10 and 11.

  17. Loc. cit., recital 8.

  18. Loc. cit.

  19. Directive [4], Art. 3 (18).

  20. Bundesgesetz über die Bekämpfung der Geldwäscherei [3].

  21. For the following: Balzli [1], p. 451s.

  22. FINMA [5], p. 6.

  23. Hauser-Spühler [8], p. 158s; Verordnung über die Bekämpfung der Geldwäscherei [17].

  24. Balzli [1], p. 452.

  25. SwissBanking [16].

  26. SwissBanking [15], p. 11.

  27. ESMA [7].

  28. EBA [6], p. 4.

  29. Following quotes from the ESMA and EBA reports referred to.

  30. EBA [6], p. 12.

  31. ESMA [7], p. 5.

  32. Loc. cit., p. 19.

  33. EBA [6], p. 18s.

  34. ESMA [7], p. 40.

  35. Rechtliche Grundlagen für Distributed Ledger-Technologie [13], p. 89.

  36. Loc. cit., p. 91.

  37. Rechtliche Grundlagen für Distributed Ledger-Technologie [13], p. 93.

  38. SR: Systematic Collection of Federal Laws, accessible under https://www.admin.ch.

  39. FINMA [5], p. 11.

  40. Rechtliche Grundlagen für Distributed Ledger-Technologie [13], p. 123.

  41. Loc. cit., p. 114s.

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  1. Niederer Kraft Frey Ltd., Bahnhofstrasse 53, 8001, Zurich, Switzerland

    Thomas A. Frick

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The article is based on two presentations given by the author at the Academy of European Law ERA, ‘FinTech: Virtual and digital currencies: a closer look—The Swiss Approach’ in London on 15 March 2018, and ‘Implications of the 5th AMLD for third countries and the crypto space’ in Trier on 15 November 2018, but has been significantly amended due to recent developments, in particular the various reports issued in the jurisdictions discussed.

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Frick, T.A. Virtual and cryptocurrencies—regulatory and anti-money laundering approaches in the European Union and in Switzerland. ERA Forum 20, 99–112 (2019). https://doi.org/10.1007/s12027-019-00561-1

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