The Swiss DLT Act: How Switzerland Legalised Tokenised Securities

Background: The Legislative Problem

Before Switzerland’s DLT Act (formally: Bundesgesetz zur Anpassung des Bundesrechts an Entwicklungen der Technik verteilter elektronischer Register — the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology), a fundamental legal problem confronted anyone trying to issue tokenised securities in Switzerland.

Swiss securities law — like securities law in most jurisdictions — was designed for a world in which securities exist either as physical paper certificates (Wertpapiere) or as dematerialised book entries in a central securities depository (like SIX SIS, Switzerland’s central securities depository). Both forms require an identifiable custodian, registrar, or depository. Neither applies naturally to securities that exist as entries on a permissionless blockchain.

The problem: if a Swiss company wanted to issue equity or bonds as blockchain tokens, what legal form would these tokens take? They couldn’t be Wertpapiere (they weren’t paper). They couldn’t be book entries (there was no recognised custodian). They existed in a legal gap — technically creatable as blockchain tokens, but legally uncertain in their enforceability, transferability, and insolvency treatment.

The DLT Act was the Swiss Federal Council’s answer to this problem. Developed through extensive consultation with industry (including the Crypto Valley Association, Sygnum Bank, AMINA Bank, the major Swiss law firms specialising in blockchain law, and the SIX Group), the Act was adopted by the Swiss Parliament in September 2020 and entered into force in stages beginning February 1, 2021.

What the DLT Act Changed

The DLT Act amended eight federal statutes. The most significant amendments were to:

• The Code of Obligations (Obligationenrecht, OR)
• The Federal Intermediated Securities Act (Bucheffektengesetz, BEG)
• The Banking Act (Bankengesetz, BankG)
• The Debt Enforcement and Bankruptcy Act (SchKG)
• The Financial Market Infrastructure Act (FinMIA)
• The Financial Services Act (FinSA)

Amendment 1: DLT Securities (Wertrechte in Registern)

The most consequential change was the creation of a new category of security: the DLT security (in German: Registerwertrecht, or “register-based right” — the term “DLT security” is the anglicised version used in practice). A DLT security is defined as a security right that:

1. Is registered in a distributed electronic register (a blockchain or similar DLT)
2. Is subject to rules that give all parties to the register access to the registered information
3. Is protected against modification through technical means

DLT securities have the same legal character as traditional securities — they can represent equity, debt, fund units, or other financial rights. But they exist only on the blockchain. There is no paper certificate, no central depository entry, and no custodian maintaining a separate register. The blockchain record IS the security.

This is legally transformative. For Swiss law purposes, a company can now:

• Issue equity tokens on a blockchain that have the legal character of shares
• Issue bond tokens on a blockchain that have the legal character of debt instruments
• Issue fund tokens on a blockchain that have the legal character of collective investment scheme units

And these tokens, as DLT securities, can be:

• Transferred on the blockchain with full legal effect (the transferee has legal title)
• Pledged as collateral with full legal effect
• Extinguished (when redeemed or cancelled) with full legal effect

All without any paper, any central depository, or any custodian maintaining a separate register.

Amendment 2: Insolvency Protection for Crypto Assets

Before the DLT Act, Swiss insolvency law treated crypto assets held in custody in an ambiguous way. In principle, assets held in trust for clients should be segregated from an insolvent estate — but the specific treatment of crypto assets was untested and uncertain.

The DLT Act amended the Debt Enforcement and Bankruptcy Act to explicitly provide that crypto assets held in custody for clients are segregated from the custodian’s insolvency estate. If a Swiss crypto custodian (including Sygnum or AMINA) becomes insolvent:

• Client crypto assets are not available to general creditors of the custodian
• Clients can reclaim their crypto assets from the insolvency administrator
• Client assets are treated as belonging to the client, not the custodian

This protection is now statutory — it does not depend on specific contractual provisions or trust structures, but is built into Swiss law. It is one of the strongest client protections for crypto custodial assets in any jurisdiction and has been explicitly cited by institutional clients of Sygnum and AMINA as a factor in their choice of Swiss custody.

Amendment 3: DLT Trading Facility Licence

The DLT Act created a new financial market infrastructure licence: the DLT trading facility (DLT-Handelssystem). This is a regulated trading venue specifically for DLT securities — distinct from both traditional stock exchanges and unregulated crypto exchanges.

A DLT trading facility licence allows the holder to:

• Operate a trading platform for DLT securities
• Provide post-trade settlement services using DLT
• Combine trading and settlement in a single infrastructure (which traditional exchanges cannot do — settlement is handled by a separate central depository)

The DLT trading facility licence was specifically designed for the SIX Digital Exchange (SDX) — SIX Group’s blockchain-based securities exchange, which received the first DLT trading facility licence in 2021. SDX operates a regulated, blockchain-native exchange where issuers can list DLT securities and institutional investors can trade them with the same regulatory protections as traditional exchange-listed securities.

Amendment 4: Securities Dealer Licensing for DLT Activities

The DLT Act clarified that securities dealer licences extend to DLT securities activities — trading, custody, and underwriting of DLT securities require the same FINMA securities dealer licence as equivalent activities in traditional securities. This clarification was important for Sygnum and AMINA, confirming that their existing securities dealer licences covered their DLT securities activities.

Practical Application: Tokenisation in Practice

The DLT Act’s DLT securities framework has been used by Sygnum and AMINA Bank in their tokenisation products. For a broader look at how Switzerland is leading in real-world asset tokenisation, including landmark institutional transactions, see our dedicated analysis. Both banks have issued DLT securities for clients including:

Equity tokenisation: Private company equity issued as DLT securities on Ethereum or proprietary blockchain infrastructure, enabling fractional ownership and secondary trading of private equity interests that would otherwise be highly illiquid.

Bond tokenisation: Corporate bonds and structured notes issued as DLT securities, enabling more efficient settlement, programmable coupon payments, and lower issuance costs than traditional bond mechanics.

Fund tokenisation: Collective investment scheme units issued as DLT securities, enabling real-time NAV-based settlement and secondary market trading of fund units.

In August 2024, Sygnum issued the industry’s first $50 million Bitcoin-backed syndicated loan — using Bitcoin as collateral in a regulated lending structure that incorporated the DLT Act’s framework. This landmark transaction demonstrated institutional comfort with crypto-collateralised lending at scale under Swiss law.

The SDX Implementation

SIX Digital Exchange (SDX), which received the world’s first DLT trading facility licence, has demonstrated the DLT Act’s practical application at institutional scale. SDX has:

• Listed tokenised bonds from Swiss issuers including the SIX Group itself
• Processed settlements in a combination of traditional Swiss franc and digital Swiss franc (d-CHF) issued by the Swiss National Bank for testing purposes
• Operated a regulated secondary market for DLT securities with full institutional market participant access

SDX’s operations provide the clearest demonstration that the DLT Act has created functional, institutionally compliant tokenised securities infrastructure — not merely legal concepts but operational market infrastructure.

Comparison to Other Jurisdictions

European Union (MiCA)

The EU’s Markets in Crypto-Assets (MiCA) regulation, effective 2024, creates a licensing framework for crypto-asset service providers but takes a different approach to DLT securities: it largely exempts them (as financial instruments regulated by existing financial markets legislation). EU member states are developing their own DLT pilot regime for trading DLT securities. Switzerland’s DLT Act provides a more complete statutory framework than the EU’s current approach.

United States

US securities law has not adapted for DLT securities. The SEC’s position — that many token offerings constitute unregistered securities offerings — has created legal uncertainty for US issuers. Wyoming and other states have created limited statutory frameworks for digital assets, but no federal DLT securities framework exists. Switzerland’s DLT Act provides significantly more clarity.

Singapore

Singapore’s Monetary Authority of Singapore (MAS) has addressed tokenised securities under existing securities law without creating a specific DLT securities category. Singapore’s approach is more flexibility-dependent (regulatory discretion) than Switzerland’s (statutory clarity).

Liechtenstein

The Principality of Liechtenstein — a small state with close ties to Switzerland and to Crypto Valley — enacted its own blockchain-specific legislation (the Blockchain Act, TVTG) in 2020, preceding Switzerland’s DLT Act. Liechtenstein’s framework is comprehensive and well-drafted but operates in a smaller jurisdiction with less institutional depth than Switzerland.

Significance for Crypto Valley

The DLT Act transformed Crypto Valley’s value proposition for the tokenisation sector. Before the Act, companies wishing to issue tokenised securities needed to navigate legal uncertainty and potential regulatory gaps. After the Act, Swiss law explicitly supports tokenised securities issuance, custody, trading, and settlement within a clear statutory framework.

This clarity is the prerequisite for institutional adoption. Sygnum’s B2B platform — which enables traditional Swiss banks to offer crypto and tokenised securities services to their own clients — is built on the DLT Act’s framework. The 20+ Swiss banks that have joined Sygnum’s platform could not offer DLT securities services without the Act’s statutory foundation.

Internal Links

• FINMA Crypto Banking Framework: How Switzerland Licences Digital Asset Banks
• Sygnum Bank: The World’s First Regulated Digital Asset Bank
• AMINA Bank AG: From SEBA to Switzerland’s Second Digital Asset Bank
• The Zug Foundation Model: How Swiss Stiftungs Power Blockchain Protocols
• Zug vs Singapore: Banking Comparison