The DLT Act of 25 September 2020

Genesis of the legislation

The Federal Council's report of December 2018 led directly to a legislative project. The consultation on a draft law opened in March 2019, and on 27 November 2019 the Federal Council published the results together with its dispatch to Parliament. The draft pursued four objectives: the creation in civil law of uncertificated register securities that could be transferred digitally, the segregation of crypto-assets and data in the insolvency of an intermediary, a new licence for DLT trading facilities open to private individuals and smaller participants, and the confirmation that anti-money-laundering law applies to decentralised trading platforms.¹

Parliament adopted the Federal Act on the Adaptation of Federal Law to Developments in Distributed Electronic Register Technology, generally called the DLT Act, on 25 September 2020. It is a framework act that contains no free-standing rules of its own. Its provisions amended a series of existing statutes, among them the Code of Obligations, the Federal Act on Debt Enforcement and Bankruptcy, the Banking Act, the Financial Services Act, the Financial Market Infrastructure Act, the National Bank Act and the Anti-Money Laundering Act.² The act entered into force in two stages. The provisions of civil law on ledger-based securities, together with amendments to the Federal Intermediated Securities Act, the Federal Act on Private International Law, the Financial Services Act and the Financial Institutions Act, took effect on 1 February 2021 so that companies could begin to issue ledger-based securities. On 18 June 2021 the Federal Council brought the remaining provisions into force with effect from 1 August 2021, together with a blanket ordinance that adapted ten existing ordinances.³

Ledger-based securities in the Code of Obligations

The most original part of the DLT Act lies in civil law. Articles 973d to 973i of the Code of Obligations introduce the ledger-based security, known in German as the Registerwertrecht. Article 973d defines it as a right which, according to an agreement between the parties, is registered in a securities ledger and can be asserted and transferred to others only through that ledger. The ledger must meet four requirements. It must give the creditors, but not the debtor, power of disposal over their rights by means of technical procedures. Its integrity must be protected by adequate technical and organisational measures, such as joint management by several independent participants, against unauthorised modifications. The content of the rights, the functioning of the ledger and the registration agreement must be recorded in the ledger or in accompanying data linked to it. Finally, creditors must be able to view the information and ledger entries that concern them and to verify the integrity of the ledger contents relating to them without the intervention of a third party. The debtor must ensure that the ledger is organised in accordance with its purpose.⁴

The design is deliberately technology-neutral. The Code does not mention blockchains, tokens or particular protocols. Any ledger that fulfils the four functional requirements may serve as the basis of a ledger-based security. The instrument transposes the functions of the classic paper security into the digital world: the ledger entry replaces possession of the document, while the rules on legitimation, the debtor's discharge by payment to the registered creditor and the good-faith acquisition by a third party apply by analogy. Transfer takes place through the ledger in accordance with the registration agreement, which removes the requirement of a written assignment that had previously hampered the transfer of uncertificated securities.⁵

Almost any right that can be embodied in a security may take the form of a ledger-based security: shares, bonds, participation certificates, derivatives and contractual claims. Pure cryptocurrencies such as Bitcoin fall outside the concept because no issuer stands behind them. For companies in Zurich the practical significance lay first in the issuance of tokenised shares, so-called DLT shares, by start-ups and small and medium-sized companies. A company can provide in its articles of association that its shares are issued as ledger-based securities and can then maintain its register of shareholders on a blockchain-based platform. Several Swiss platforms have developed standardised registration agreements and smart contracts for this purpose. Industry bodies such as the Capital Markets and Technology Association in Geneva published standards and model documents that lowered transaction costs for issuers.⁶

A related amendment of the Federal Act on Private International Law clarified the conflict rule for ledger-based securities. Where the parties have not chosen a law, the security is governed by the law of the issuer's seat, which gives Swiss ledger-based securities a stable anchor in Swiss law when they are held by investors abroad.⁷

Segregation of crypto-assets in bankruptcy

The second pillar of the DLT Act concerns insolvency law. Before 2021 the position of a customer whose crypto-assets were held by a custodian that went bankrupt was uncertain. Swiss bankruptcy law allowed the owner of movable property held by the bankrupt to recover it, but it was doubtful whether crypto-assets, which are neither things in the sense of property law nor claims in the classic sense, could be treated in the same way. The new Article 242a of the Federal Act on Debt Enforcement and Bankruptcy resolves the question. The bankruptcy administration must decide on the surrender of crypto-based assets over which the bankrupt had the power of disposal at the time of the opening of bankruptcy and which are claimed by a third party. The claim is well founded if the bankrupt had undertaken to keep the crypto-based assets available for the third party at all times and if the assets are either individually attributed to the third party or attributed to a community with a clear indication of the share to which the third party is entitled. If the administration rejects the claim, the claimant has twenty days to bring an action before the court at the place of bankruptcy. The costs of surrender are borne by the party that requests it.⁸

A parallel rule in Article 16 of the Banking Act applies the same principle to banks and securities firms, so that crypto-assets held in custody for customers are treated as custody assets and are segregated from the bankrupt estate. The DLT Act added an entitlement to the surrender of data, which protects businesses that store their data with a provider that becomes insolvent.⁹ These insolvency rules have become the legal foundation of the Swiss custody business. The collapse of several crypto platforms abroad in 2022, which left customers as unsecured creditors in insolvency proceedings in other jurisdictions, gave Swiss custodians an argument that they could present to institutional clients: in Switzerland, crypto-assets held on behalf of a customer and available to that customer at any time belong to the customer and do not enter the bankrupt estate.

The DLT trading facility

The third pillar is a new category of financial market infrastructure. Chapter 4a of the Financial Market Infrastructure Act, beginning with Article 73a, regulates the DLT trading facility. It is defined as a commercially operated institution for the multilateral trading of DLT securities that meets at least one of three further conditions: it admits other persons than supervised financial intermediaries, including private individuals, as participants; it holds DLT securities in central custody on the basis of uniform rules and procedures; or it clears and settles transactions in DLT securities on the basis of uniform rules and procedures. The operator must be a legal entity under Swiss law with its registered office and head office in Switzerland and requires a licence from FINMA.¹⁰

The innovation of the DLT trading facility lies in the combination of functions that traditional infrastructure law keeps apart. A classic stock exchange admits only supervised participants such as banks and securities firms, while custody and settlement are performed by a separate central securities depository. The DLT trading facility may combine trading, custody and settlement in a single entity and may admit private investors directly. The Federal Council considered that a distributed ledger reduces some of the risks that justify the separation of functions, because settlement on the ledger can take place simultaneously with the trade. Smaller DLT trading facilities benefit from reliefs in organisational, institutional and financial requirements on the basis of the principle of proportionality.¹¹ The DLT Act also clarified that operators of DLT trading facilities are financial intermediaries under the Anti-Money Laundering Act.

The first licensed DLT infrastructure in Switzerland did not in fact use the new licence. On 10 September 2021 FINMA granted SIX Digital Exchange AG a licence as a central securities depository and SDX Trading AG a licence as a stock exchange. FINMA described these as the first approvals in Switzerland of financial market infrastructures for the trading and settlement of tokenised securities. SDX had chosen the traditional path under the Financial Market Infrastructure Act, which restricted access to supervised participants.¹² The choice showed that incumbent infrastructure operators in Zurich valued the recognition that came with the established licence categories more than the flexibility of the new one. The role of SIX and SDX in the digital market infrastructure of Zurich is discussed in the following chapter and, for the stock exchange generally, in Part H.

The first licence as a DLT trading facility was granted only on 18 March 2025, three and a half years after the relevant provisions had entered into force. The licensee was BX Digital AG, a sister company of the exchange BX Swiss AG within the Boerse Stuttgart Group. FINMA authorised it to operate the multilateral trading of DLT securities and the downstream settlement of transactions. The facility qualifies as a small DLT trading facility and benefits from the corresponding reliefs. Access is limited in a first stage to supervised participants, usually banks, and BX Digital does not itself hold the securities in custody. Settlement takes place on the Ethereum blockchain with a connection to the Swiss Interbank Clearing (SIC) payment system of the Swiss National Bank, with a smart contract ensuring that delivery and payment occur simultaneously. Before granting the licence FINMA required business continuity strategies and technical reviews of the code of the smart contracts.¹³

The slow take-up of the DLT trading facility licence reflects the same economic realities that limited the fintech licence. A trading venue requires liquidity, and liquidity requires issuers and investors who are prepared to move from established infrastructure to a new one. The possibility of admitting private individuals directly was one of the most innovative features of the Swiss regime, yet the first licensee chose to begin with banks as participants. The law created the option earlier than the market was ready to use it. The existence of the legal framework nevertheless mattered, because it gave Swiss banks and infrastructure providers the certainty that tokenised securities issued under Swiss law would have a recognised place to be traded and settled.

Notes

1. Loyens & Loeff, “Federal Council published a draft DLT-law after public consultation”, https://www.loyensloeff.com/insights/news--events/news/federal-council-published-a-draft-dlt-law-after-public-consultation/. ↩
2. Library of Congress, Global Legal Monitor, “Switzerland: New Amending Law Adapts Several Acts to Developments in Distributed Ledger Technology”, 3 March 2021, https://www.loc.gov/item/global-legal-monitor/2021-03-03/switzerland-new-amending-law-adapts-several-acts-to-developments-in-distributed-ledger-technology/. ↩
3. Swiss Federal Council, “Federal Council brings DLT Act fully into force and issues ordinance”, media release, 18 June 2021, https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-84035.html. On the list of statutes amended on 1 February 2021 and the ordinances adapted on 1 August 2021, see also Walder Wyss, “Entry into force of second part of DLT Act and its associated ordinance on 1 August 2021”, 2 July 2021, https://www.walderwyss.com/assets/content/publications/Entry_into_force_of_second_part_of_DLT_Act_and_its_associated_ordinance_on_1_August_2021.pdf. ↩
4. Art. 973d of the Swiss Code of Obligations, German text reproduced at swissrights.ch, https://www.swissrights.ch/gesetze/Artikel-973d-OR-2025-DE.php. ↩
5. Pestalozzi Attorneys at Law, “Registerwertrechte: Einführung von DLT-Aktien in der Schweiz”, 19 March 2021, https://pestalozzilaw.com/de/insights/aktuell/legal-insights/registerwertrechte-einfuhrung-von-dlt-aktien-der-schweiz/. The authors note that the amendment of Article 622 of the Code of Obligations allows companies limited by shares to issue their shares as ledger-based securities. ↩
6. Capital Markets and Technology Association, https://cmta.ch (accessed September 2026), which states that the association is registered in the commercial register of the canton of Geneva and publishes legal standards and the open-source CMTA Token (CMTAT). Its standard for the tokenisation of shares of Swiss corporations is listed in Wikipedia, “Capital Markets and Technology Association”, https://en.wikipedia.org/wiki/Capital_Markets_and_Technology_Association. ↩
7. Article 145a of the Federal Act on Private International Law, inserted by the Federal Act of 25 September 2020 on the Adaptation of Federal Law to Developments in Distributed Electronic Register Technology with effect from 1 February 2021: whether a claim is represented and transferred by a title in paper or equivalent form is governed by the law designated in the title and, failing such designation, by the law of the issuer's seat. Text at droit-bilingue.ch, https://droit-bilingue.ch/de-en/2/29/291-145a-169.html, and in the final-vote text, https://www.parlament.ch/centers/eparl/curia/2019/20190074/Schlussabstimmungstext%201%20NS%20D.pdf. ↩
8. Art. 242a of the Federal Act on Debt Enforcement and Bankruptcy, German text reproduced at swissrights.ch, https://www.swissrights.ch/gesetze/Artikel-242a-SchKG-2025-DE.php. ↩
9. Article 242b of the Federal Act on Debt Enforcement and Bankruptcy (“Zugang zu Daten und Herausgabe”), introduced by the DLT Act of 25 September 2020, gives a third party that shows a statutory or contractual entitlement to data under the control of the bankrupt a right of access to and surrender of those data. Final-vote text, https://www.parlament.ch/centers/eparl/curia/2019/20190074/Schlussabstimmungstext%201%20NS%20D.pdf. ↩
10. FINMA, “Licensing as a DLT trading facility”, https://www.finma.ch/en/authorisation/fintech/dlt-handelssystem/. The page refers to the Financial Market Infrastructure Act, the Financial Market Infrastructure Ordinance and the FINMA Financial Market Infrastructure Ordinance as the legal basis. ↩
11. Walder Wyss, “Entry into force of second part of DLT Act and its associated ordinance on 1 August 2021”, 2 July 2021, https://www.walderwyss.com/assets/content/publications/Entry_into_force_of_second_part_of_DLT_Act_and_its_associated_ordinance_on_1_August_2021.pdf. ↩
12. FINMA, “FINMA issues first-ever approval for a stock exchange and a central securities depository for the trading of tokens”, 10 September 2021, https://www.finma.ch/en/news/2021/09/finma-issues-first-ever-approval-for-a-stock-exchange-and-a-central-securities-depository-for-the-trading-of-tokens/. FINMA stated that it had applied existing financial market law in a consistently technology-neutral way. ↩
13. FINMA, “FINMA licenses first DLT trading facility”, media release, 18 March 2025, https://www.finma.ch/en/news/2025/03/20250318-mm-dlt-handelssystem/. ↩

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.