Segregation in bankruptcy and the custody of Kryptowerte und Digital Assets

Article 242a DEBA

Before 2021 the position of a client whose bitcoin was held by a bankrupt exchange was uncertain. Swiss bankruptcy law allowed the segregation of movable property owned by third parties under Article 242 of the Federal Act on Debt Enforcement and Bankruptcy of 11 April 1889 (DEBA), SR 281.1, but Kryptowerte und Digital Assets are not things in the sense of property law and cannot be owned in the classic sense. A client of a custodian therefore had at most a contractual claim for the return of the tokens, which would be converted into a money claim in the bankruptcy and satisfied with the dividend of the third class of creditors. The DLT Act closed this gap with a new Article 242a DEBA. Under that provision the bankruptcy administration decides on the surrender of crypto-based assets over which the bankrupt had the power of disposal when bankruptcy was opened and which a third party claims. The claim is founded if the bankrupt has undertaken to keep the assets available for the third party at all times and if they are either attributed individually to the third party or attributed to a community in which it is apparent what share of the common assets belongs to the third party.¹

The two conditions mirror the two forms of custody used in practice. In individual custody each client has a separate address on the blockchain whose private key the custodian holds. In collective custody the custodian holds the tokens of many clients at one or more addresses and records each client's share in its internal books. Article 242a DEBA protects both forms, provided that the custodian keeps the tokens available for the client at all times and that the client's share can be determined at any moment. A custodian that lends the tokens to third parties, uses them for its own trading or pledges them as collateral does not keep them available at all times, with the result that the clients lose the right of segregation and become ordinary creditors. The bankruptcy administration decides on the segregation. If it considers a claim unfounded, it sets the client a time limit of twenty days to sue at the court of the place of bankruptcy, failing which the claim is forfeited (Article 242a paragraph 3 DEBA). The costs of the surrender are borne by the person who requests it, and the bankruptcy administration may demand an advance (paragraph 4).²

Access to data and the banking side

A related provision, Article 242b DEBA, applies where data are under the control of the bankrupt estate. In that case any third party that proves a statutory or contractual entitlement to the data may demand, depending on the nature of the entitlement, access to the data or their surrender. The provision covers private keys, documents and other data stored by a provider, for example a provider of cloud services. If the bankruptcy administration considers the claim unfounded, it sets a time limit of twenty days for an action, and until the court has decided the data may be neither destroyed nor realized. The costs are borne by the person who requests access, and an advance may be demanded.³ For Kryptowerte und Digital Assets the provision matters where the client holds the private key but the provider holds encrypted backups or other data necessary for access.

Banking law received parallel amendments. Article 16 number 1bis BankA now includes among the custody assets that are segregated in the bankruptcy of a bank the cryptobased assets that the bank holds for its custody account clients, on the same conditions of permanent availability and individual or collective attribution. Article 37d BankA provides that custody assets within the meaning of Article 16 are segregated in accordance with Articles 17 and 18 of the Federal Intermediated Securities Act, and that Article 19 of that Act applies to assets in collective custody in the event of a shortfall.⁴ The amendment had practical consequences for capital requirements. FINMA does not require a bank to hold capital against client assets that are segregated in bankruptcy and therefore not exposed to its creditors. Where the conditions for segregation are not met, the client's tokens become a liability of the bank, which must hold capital and liquidity against it as for a deposit. The DLT Act also added to the Banking Act a provision on crypto-based assets, Article 4sexies BankA, under which FINMA may set a maximum amount in individual cases for crypto-based assets that a bank holds as custody assets for its clients where the risks of the business make this appropriate. FINMA takes into account in particular the function of the assets, the underlying technologies and risk-mitigating factors.⁵

Notes

1. Art. 242a paras. 1 and 2 DEBA, German text at https://www.droit-bilingue.ch/de-it/2/28/281.1-242a-273.html ("jederzeit bereitzuhalten"; "individuell zugeordnet"; "einer Gemeinschaft zugeordnet ... und ersichtlich ist, welcher Anteil am Gemeinschaftsvermögen dem Dritten zusteht"), inserted by the DLT Act with effect from 1 August 2021. See also an article on custody and staking under Swiss law published on Mondaq, https://www.mondaq.com/article/1418688 (cited below as Mondaq, custody and staking). ↩
2. Art. 242a para. 3 DEBA (time limit of twenty days; forfeiture) and para. 4 (costs; advance), https://www.droit-bilingue.ch/de-it/2/28/281.1-242a-273.html; for movable property the parallel rule is Art. 242 para. 2 DEBA, https://www.droit-bilingue.ch/de-it/2/28/281.1-242-272.html. ↩
3. Art. 242b paras. 1–3 DEBA, https://www.droit-bilingue.ch/de-it/2/28/281.1-242b-274.html ("gesetzliche oder vertragliche Berechtigung an den Daten"; "Zugang zu diesen Daten oder deren Herausgabe"; twenty days; data not to be "vernichtet oder verwertet" until the decision; costs and advance), inserted by the DLT Act with effect from 1 August 2021. Para. 4 reserves the right of access under federal and cantonal data protection law. ↩
4. Art. 16 no. 1bis BankA, https://www.droit-bilingue.ch/de-it/9/95/952.0-16-44.html (crypto-based assets that the bank has undertaken to keep available for the custody account client at all times, attributed individually or to a community with an apparent share; inserted by the DLT Act with effect from 1 August 2021); Art. 37d BankA, https://www.droit-bilingue.ch/de-it/9/95/952.0-37d-81.html (segregation under Arts. 17 and 18 FISA; Art. 19 FISA for collective custody in the event of a shortfall). See also Mondaq, custody and staking (above) (custody assets "separated from the custodian's insolvency estate"). ↩
5. Art. 4sexies BankA, https://www.droit-bilingue.ch/de-it/9/95/952.0-4sexies-27.html ("kann die FINMA im Einzelfall einen Höchstbetrag festlegen"; function, technologies and risk-mitigating factors), inserted by the DLT Act with effect from 1 August 2021. On capital treatment see FINMA Guidance 08/2023 (below). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.