The practitioner’s perspective

Token sales

The questions that clients bring to lawyers in Zurich and Zug about token projects have changed since 2017, although their structure has remained stable. The first question concerns the qualification of the token. A token that represents a claim, a share or a participation in earnings is a security under the Financial Market Infrastructure Act and the Financial Services Act. Its public offering then requires a prospectus unless an exemption applies, for example for offers only to professional clients or to fewer than 500 investors. A token that promises repayment at a fixed value may amount to a deposit under banking law, as the envion case showed. A token that serves only as a means of payment triggers the obligations of anti-money laundering law for its issuer and for those who trade it. A token that grants access to a service is in principle unregulated, but only as long as it is not marketed as an investment.¹

The second question concerns the choice of instrument. Since the DLT Act, shares, bonds and other rights can be issued directly as ledger-based securities under Article 973d of the Code of Obligations, provided that the registration agreement and the ledger meet the statutory requirements. For many issuers this is now the natural route, because it gives the token the legal effect of a security while avoiding the need for a traditional depository. The third question concerns the market. An issuer that wants secondary trading must choose between a licensed DLT trading facility, an organised trading facility such as the TDX marketplace, a traditional exchange for dual-listed instruments and decentralised platforms outside Switzerland. Each option brings different obligations for investor protection, disclosure and anti-money laundering. The fourth question concerns taxation, in particular the treatment of the proceeds of a token sale for the issuing entity and the characterisation of distributions for Swiss withholding tax, for which chapter H.V provides the general background.

Experience since 2017 suggests some rules of thumb. A project that raises money from the public should assume that its token will be examined under securities law in every jurisdiction where it is offered and should restrict the offer accordingly. The Tezos and Dfinity cases showed that American class actions follow sales to American investors regardless of the issuer’s Swiss seat. A project that promises holders a return should expect to be treated as offering an investment, whatever the label on the token. Finally, a project that wants a Swiss bank account must be able to document the origin of all funds received, including those received in crypto-assets, because the banks will apply the full standards of the Swiss travel rule and of their own risk policies.

Foundations, DAOs and governance

The second group of questions concerns governance. A foundation remains a suitable vehicle for the stewardship of an open-source protocol, but it demands a board that understands its fiduciary duties and a deed of foundation that describes the purpose precisely enough to guide decisions and broadly enough to allow the project to evolve. Changes of purpose require a decision of the competent federal or cantonal authority and are possible only within narrow limits, so the initial drafting matters.² Where the founders want to retain influence, they must do so through the composition of the board, a right of proposal or a contractual relationship with a development company, since the founders of a foundation do not own it.

Decentralised autonomous organisations add another layer of complexity. A DAO in which token holders vote on proposals through smart contracts has no legal personality of its own under Swiss law. Depending on its structure, it may be qualified as a simple partnership under Articles 530 ff. of the Code of Obligations, with the consequence that its members may be jointly and severally liable for its obligations.³ For that reason Swiss practice usually combines the DAO with a legal wrapper, typically a foundation or an association, which carries out the decisions of the token holders, enters into contracts and holds assets. The board of that entity must then reconcile the votes of the token holders with its own duties under Swiss law. A board cannot simply execute a vote that would violate the purpose of the foundation, the law or the rights of third parties, since the supervisory authority will hold the board responsible for the decision.

Tracing and recovery of crypto-assets

The third group of questions concerns the recovery of crypto-assets that have been lost through fraud, theft or the failure of a platform. The victim of a fraud in which crypto-assets have been transferred to unknown addresses needs, first, a forensic analysis of the blockchain to follow the transfers to an exchange or custodian where the assets can be frozen. That analysis must be carried out quickly, because the perpetrators often move the funds through mixers, cross-chain bridges and several exchanges within days. The second step is a criminal complaint to the competent prosecutor, combined with a request for the seizure of the assets at the identified exchange. The Zurich romance scam case shows that this route can succeed even against an exchange in a distant jurisdiction. Where the exchange is located in Switzerland, the prosecutor can order it to freeze the assets and to disclose the identity of the account holder.

Civil remedies complement the criminal route. A claimant with a monetary claim can seek an attachment of crypto-assets held at a Swiss custodian under the Debt Enforcement and Bankruptcy Act, although the identification of the assets and of the custodian is often the practical obstacle. Where the assets have left Switzerland, cooperation with foreign authorities through the channels described in chapter I.V, and increasingly the direct response of large exchanges to freezing requests, determine the outcome. For clients of a failed Swiss custodian, the rules on segregation in insolvency give a strong position, provided that the custodian complied with its obligation to keep the assets available and to attribute them to the clients. The first step in such a case is therefore an analysis of the custody agreement and of the custodian’s records.

The reverse situation also arises. Clients who hold substantial wealth in crypto-assets and Digital Assets increasingly want to protect it against the risks of hacks, loss of keys, divorce, succession disputes and insolvency of intermediaries. Swiss practice uses the same instruments as for traditional wealth: custody with a regulated bank, multi-signature arrangements with institutional key holders, trusts or foundations under foreign law and clear documentation of ownership and succession. What distinguishes crypto wealth is the importance of the technical arrangements for access to the keys. A will or a trust deed that does not ensure that the heirs or trustees can actually access the assets may leave them unreachable.

Notes

1. FINMA, “Guidelines for enquiries regarding the regulatory framework for initial coin offerings (ICOs)”, 16 February 2018, https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/1bewilligung/fintech/wegleitung-ico.pdf, under which the issue of payment tokens is subject to anti-money laundering rules and utility tokens are not treated as securities if their sole purpose is to confer digital access rights, whereas tokens with an investment purpose are treated as securities. See also Articles 35 and 36 of the Financial Services Act (FinSA), SR 950.1, on the prospectus requirement and Article 2 letter b of the Financial Market Infrastructure Act (FMIA), SR 958.1, on the definition of securities. ↩
2. Articles 86 and 86a of the Swiss Civil Code, https://www.droit-bilingue.ch/rs/lex/1907/00/19070042-a86-en-de.html and https://www.droit-bilingue.ch/rs/lex/1907/00/19070042-a86a-en-de.html. The competent federal or cantonal authority may amend the purpose where it has become estranged from the founder's intentions, or at the founder's request where the deed reserves this right and at least ten years have elapsed. ↩
3. State Secretariat for Economic Affairs, KMU-Portal, “Einfache Gesellschaft: Gründung auf Zeit”, https://www.kmu.admin.ch/de/einfache-gesellschaft-gruendung-auf-zeit, on Arts. 530–551 CO, the absence of legal personality and the joint, several and unlimited liability of the partners (Art. 544 para. 3 CO); Goldblum, Marcus Altenburg, “DeFi & DAO Legal Structuring Switzerland”, https://goldblum.ch/crypto/defi-dao-structuring/ (participants of a DAO without a legal wrapper “risk being treated as a simple partnership under Art. 530 ff. of the Code of Obligations, carrying joint and several personal liability”). The courts have not yet ruled on the point. ↩

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.