The Swiss DLT Act at Three: Impact Assessment and Market Development

The Swiss Federal DLT Act has now been in force for five years — long enough to assess not merely what it promised but what it delivered. The verdict requires precision. The DLT Act is, without question, the world’s most successful blockchain-specific legislation by the measure of implementation depth: Switzerland has an operational regulated DLT securities exchange, Swiss banks are issuing tokenised bonds and structured products, and the Swiss National Bank has settled DLT securities in central bank money. By those measures, the Act’s core promise — legal certainty enabling market development — has been fulfilled. But secondary market liquidity remains thin, cross-border interoperability with the EU is unresolved, and the land registry integration that would unlock real estate tokenisation is institutionally stalled. A complete assessment requires examining both dimensions.

What the Act Promised

The Federal Council’s 2019 Botschaft — the official explanatory message accompanying the DLT Act’s draft — was clear about its objectives. Switzerland’s DLT market faced three specific legal deficiencies that the Act aimed to remedy.

The first was the absence of a recognised legal category for blockchain-native securities. Under pre-DLT Act Swiss law, a security that existed only on a blockchain had no statutory home. It could not be a book-entry security under the Federal Intermediated Securities Act (which required a central securities depository), and it could not be a bearer security (which required a physical paper instrument). The Act’s introduction of the Registerwertrecht addressed this directly.

The second was legal uncertainty over the treatment of crypto assets in custodian insolvency. Swiss insolvency law had clear provisions for client securities held in custody — they were segregated from the custodian’s estate — but the application of these provisions to crypto assets was contested. The Act’s Banking Act amendment eliminated the ambiguity.

The third was the absence of a regulatory licence permitting the combination of trading and settlement functions in a single DLT-based platform. The Act’s FinfraG amendment created the DLT trading facility licence specifically to enable SIX Digital Exchange’s planned operating model.

The promise was, in summary: create the statutory conditions under which a regulated institutional DLT securities market could form in Switzerland.

What Has Happened: The Successes

SIX Digital Exchange is operational and growing. The world’s first DLT trading facility has moved through its initial launch phase into genuine operational activity. Tokenised bonds from UBS, Julius Baer, the World Bank, and SIX Group itself are listed on SDX. The participant count has grown as additional Swiss and international banks have joined. SDX has issued structured products and has tested DLT-based equity instruments. By any reasonable benchmark, SDX’s first five years represent a success story for regulated institutional DLT market infrastructure.

Sygnum and AMINA Bank are issuing DLT securities. Switzerland’s two specialist digital asset banks — each holding a full FINMA banking and securities dealer licence — have established themselves as the primary issuance and custody infrastructure for DLT securities outside of SDX. Sygnum’s increasingly sophisticated product range, culminating in complex structured credit products using DLT-native collateral, demonstrates that the Swiss DLT market has moved beyond vanilla tokenised bond issuance.

The SNB has conducted DLT securities settlement in central bank money. Project Helvetia — the Swiss National Bank’s programme to explore wholesale digital CHF for DLT securities settlement — produced production-environment tests in which real tokenised bonds were settled in d-CHF on the SDX platform. The SNB thus became the first central bank in the world to settle tokenised securities with CBDC in an operational (not merely experimental) context. This is a landmark achievement: it demonstrates that the highest tier of monetary infrastructure — central bank money — can be integrated with blockchain-based securities settlement in a fully operational context.

The market has reached CHF 500 million in DLT securities issuance. From a standing start in 2021, Switzerland’s DLT securities market has accumulated approximately CHF 500 million in issued instruments. This is a small fraction of Switzerland’s total bond market, but it represents the world’s largest pool of legally certain, regulated, exchange-traded tokenised securities.

What Has Been Slower Than Expected

Secondary market liquidity remains thin. The primary market for Swiss DLT securities — initial issuance — has developed satisfactorily. The secondary market — ongoing trading between investors after issuance — has not. SDX’s secondary market volumes, while growing, remain modest relative to equivalent traditional bond market volumes. The constraint is not legal or regulatory; the DLT Act and FINMA’s framework provide complete legal certainty for secondary trading. The constraint is structural: SDX has a limited participant base (institutional, FINMA-supervised entities only), and the total stock of DLT securities eligible for secondary trading is still relatively small. Secondary liquidity follows primary issuance volume; as the primary market grows, secondary liquidity should improve.

Land registry integration has stalled. The DLT Act’s framework theoretically enables DLT-based real estate instruments — tokenised mortgage-backed securities or fund units with real estate exposure — but direct integration of DLT records with cantonal land registries has not progressed. This is not a legislative failure per se; the DLT Act never promised to reform cantonal land registries, which are governed by Swiss civil property law and cantonal administrative law. The challenge is that enabling true direct real estate tokenisation — where the DLT record is itself the property title, not merely a reference to an off-chain title — requires cantonal legislative action across 26 cantons. That level of federal-cantonal coordination is inherently slow and has not been prioritised.

Cross-border interoperability with the EU has not been resolved. The EU’s DLT Pilot Regime (applicable from March 2023) creates a sandboxed regime for DLT-based securities trading and settlement within the EU. Swiss DLT securities — Registerwertrechte under the Swiss DLT Act — are not automatically eligible for trading on EU DLT Pilot Regime platforms, nor are EU DLT Pilot Regime instruments automatically eligible for trading on SDX. The legal and regulatory interoperability between Swiss and EU DLT securities frameworks requires bilateral agreement that has not yet been concluded. This is a significant constraint for Swiss DLT securities’ international tradability.

The MiCA Interaction Challenge

The EU’s Markets in Crypto-Assets Regulation (MiCA, applicable from December 2024) has created an additional complexity for Swiss DLT market actors. MiCA establishes a unified licensing regime for crypto-asset service providers (CASPs) across the EU, with a passporting mechanism that allows licensed CASPs to operate across all 27 member states.

Swiss entities — including Sygnum and AMINA Bank — are not eligible for MiCA passports. Switzerland is not an EU member state, and the Swiss DLT Act’s Registerwertrecht framework does not automatically map onto MiCA’s asset categories. Swiss DLT securities may fall within MiCA’s scope as “asset-referenced tokens” or “e-money tokens” in some circumstances, or may qualify as financial instruments (and thus fall outside MiCA’s scope) in others — the classification analysis is fact-specific and the regulatory guidance is still developing.

This means that Swiss DLT securities issuers seeking to access EU institutional investors must navigate both Swiss DLT Act compliance and MiCA compliance — a regulatory burden that EU-domiciled issuers operating within the DLT Pilot Regime avoid. The Swiss-EU bilateral engagement on financial market access, disrupted by the 2021 collapse of the Framework Agreement negotiations, has not yet produced the regulatory recognition mechanisms that would allow Swiss DLT securities to be accessed by EU institutional investors on a simplified basis.

The International Response: Influence Without Replication

The Swiss DLT Act has influenced every subsequent major DLT securities legislative initiative globally, without any jurisdiction having yet replicated its permanent, comprehensive statutory approach.

The EU DLT Pilot Regime directly studied Switzerland’s approach and consciously chose a different model: temporary, sandboxed, with instruments size caps and a built-in review mechanism. The political judgment within the EU was that the market was insufficiently developed to justify permanent legislative change to the Markets in Financial Instruments Directive and other primary EU financial market legislation. Switzerland’s more mature political consensus around DLT — anchored by Zug’s cryptocurrency hub status, the Federal Council’s early engagement with blockchain policy, and Switzerland’s tradition of financial innovation — enabled a bolder legislative move.

Singapore’s MAS Project Guardian — exploring tokenisation of financial assets in coordination with major financial institutions — has drawn directly on Switzerland’s experience in developing its regulatory approach. The Monetary Authority of Singapore’s engagement with Swiss counterparts, including SIX Group and FINMA, reflects the Swiss DLT framework’s status as the global reference point.

The UK’s FCA Digital Securities Sandbox (launched 2024) takes yet another approach: a firm-specific, time-limited sandbox for individual DLT securities market participants to test DLT-based infrastructure, with the possibility of migrating to a permanent regime if the testing phase is successful. The UK approach is even more cautious than the EU Pilot Regime, reflecting the FCA’s post-Brexit recalibration of its regulatory stance toward financial innovation.

None of these international responses has replicated Switzerland’s decision to make DLT securities a permanent category in mainstream statutory law. This remains Switzerland’s distinctive competitive advantage.

The 2025-2026 Legislative Agenda

The Federal Council is conducting a review of DLT Act implementation, with potential amendments anticipated in the 2025-2026 legislative cycle. The key issues under consideration include:

Cross-border DLT securities — whether Swiss law should be amended to provide more explicit rules for the recognition of foreign DLT securities under Swiss law and the treatment of Swiss DLT securities under foreign law, to address the interoperability deficit.

Land registry blockchain integration — the Federal Council has been studying options for enabling DLT-based records to interface with cantonal land registries, potentially through a federal framework that creates national minimum standards without requiring cantonal legislative action.

SNB wholesale CBDC decision — the Federal Council and SNB are jointly considering whether to make a permanent wholesale digital CHF available for DLT securities settlement, building on Project Helvetia’s successful production tests. A positive decision would be the single most significant infrastructure development for Switzerland’s DLT market since the DLT Act itself.

The Verdict

The Swiss DLT Act is the most successful blockchain-specific legislation globally by any meaningful measure of implementation depth. It has produced an operational regulated DLT securities exchange (SDX), a functioning DLT securities market with CHF 500 million in issued instruments, central bank CBDC experiments that no other jurisdiction has matched, and a generation of Swiss DLT market participants — Sygnum, AMINA, SIX Group — whose institutional sophistication is unmatched globally.

The Act’s unresolved challenges — secondary market liquidity, cross-border interoperability, land registry integration — are real but are the expected growing pains of a genuinely novel market in its early years. None of these challenges is attributable to a deficiency in the DLT Act’s statutory framework; all are the result of market development dynamics, federal-cantonal complexity, and the absence of international regulatory harmonisation — factors that no domestic statute can fully resolve unilaterally.

The Swiss DLT Act created the conditions for institutional DLT market development. The market is developing. That is the outcome it was designed to produce.

Related Coverage

• The Swiss DLT Act: A Complete Analysis of the World’s Leading DLT Legislation
• SIX Digital Exchange: The World’s First Regulated DLT Securities Exchange
• Switzerland’s DLT Securities Market: Issuers, Instruments, and the Tokenisation Outlook
• Switzerland’s AMLA and Crypto: Anti-Money Laundering Obligations for DLT Businesses
• Issuing Digital Bonds in Switzerland: The Registerwertrecht Framework and Step-by-Step Process

Donovan Vanderbilt is Editor of ZUG DLT, published by The Vanderbilt Portfolio AG, Zurich. This analysis is for informational purposes only and does not constitute legal or investment advice. See our full Disclaimer.