Collateral and the pledge of crypto-assets

Read the PDF edition (2 pages)

Crypto-assets are increasingly used as collateral. Clients of crypto banks borrow against their Bitcoin or ether, while traders post crypto-assets as margin on derivatives exchanges. The legal basis of such collateral depends on the nature of the asset. Ledger-based securities can be pledged under Article 973g of the Code of Obligations, which allows collateral to be posted without a transfer of the security if the collateral is visible in the securities ledger and only the collateral recipient can dispose of the security in the event of default.¹ For payment tokens, which are not ledger-based securities, the legal position is less clear. Practitioners use transfers of full title for security purposes or contractual arrangements in which the lender holds the tokens in its own custody.

The enforcement of collateral in crypto-assets is fast in practice. Where the lender holds the tokens, it can sell them on the market when the borrower defaults, often automatically when the value falls below a threshold. The rapid liquidations of 2022 showed the effects of this mechanism in a falling market. Swiss law requires that the realisation of a pledge be carried out in accordance with the contract and the principles of good faith. Where the borrower is a consumer, loans secured by crypto-assets may also fall under the Consumer Credit Act, which imposes requirements on the creditworthiness assessment and the information given to the borrower.

Notes

Code of Obligations (SR 220), Art. 973g (official English translation, fedlex.admin.ch, consulted via droit-bilingue.ch): collateral may be posted without transfer of the ledger-based security if it is visible in the securities ledger and it is ensured that only the collateral recipient can dispose of the security in the event of default; otherwise the rules of the Civil Code on liens and pledges of certificated securities apply (Arts. 895– 906 CC). ↩

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 September 2025.

English

Contact

Dr Alexander Ressos, TEP

Rechtsanwalt/Attorney-at-Law

I am a Swiss attorney-at-law and also admitted as a solicitor in Hong Kong and in England & Wales, with almost 25 years of experience.

Together with my multilingual team, including Chinese, Japanese, Korean, Russian, Ukrainian and French native speakers, I advise companies and their owners from around the world on the full range of banking, corporate, commercial and tax law matters in Switzerland, including international tax planning, fiduciary services, and legal family office services including immigration & relocation or real estate investments. My practice has a particular focus on clients from growth and frontier markets in Greater China, Central Asia and the Caucasus, the rest of Asia, the Middle East, Africa and Latin America, and I equally advise clients from Europe and North America. Through an affiliated Swiss trust company, we also take care of the incorporation and ongoing administration of their companies and other structures, including accounting, tax returns and corporate secretarial services, and I serve as a professional director where required. With the support of a network of first-class cooperation partners, I also implement solutions worldwide.

My approach is to act as a trusted advisor who works directly with decision-makers, on an equal footing: I start from what you want to achieve and shape every structure, contract and tax decision around your commercial goals and how it improves your after-tax return. As “lawyers who make it happen”, my team and I stay involved until your company is set up, your structure is in place and your transaction has closed, and we remain available for any follow-on work that may be required. You benefit from bespoke solutions and personal attention, and sound, friendly and practical advice. We are not the lowest-cost provider in the market, nor do we intend to be; our aim is to deliver well-founded, proper solutions and excellent value for money.

Get in touch →

Collateral and the pledge of crypto-assets

Notes

Setting up or expanding in Switzerland?