Issuing Digital Bonds in Switzerland: The Registerwertrecht Framework and Step-by-Step Process

On 1 February 2021, the Swiss DLT Act introduced the Registerwertrecht — a right incorporated in a distributed electronic register such that its holder can exercise it independently, without any intermediary. For bond issuers, this legal innovation eliminates the paper certificate and the central securities depository simultaneously. The blockchain register is not a record of the bond; the blockchain register is the bond. That distinction — seemingly technical — has profound practical and legal consequences for every step of the issuance process.

This article does not duplicate the broader securities market analysis covered elsewhere. It focuses specifically on what a prospective digital bond issuer needs to know: the legal instrument, the step-by-step process, the realistic cost picture, and the lessons from Switzerland’s landmark issuances.

What a Registerwertrecht Is — and Is Not

A Registerwertrecht is defined in Article 973d of the Swiss Code of Obligations (CO). It is a right — in the bond context, a creditor’s claim against the issuer for principal and interest — that has been incorporated into a distributed electronic register satisfying three cumulative technical requirements under Article 973d(2) CO:

1. Tamper-resistance: the register’s integrity must be protected by technical means against unauthorised modification
2. Participant access: persons entitled to exercise rights must be able to access and verify the register’s contents
3. Independent exercise: the registered holder must be able to exercise rights without requiring the cooperation of an intermediary or the register operator

These are functional requirements, not prescriptions for a specific blockchain. Both the permissioned R3 Corda platform used by SIX Digital Exchange and Ethereum-based infrastructure used by Sygnum Bank can satisfy them, provided the specific implementation is architecturally compliant.

What a Registerwertrecht is not: it is not a tokenised representation of a conventionally issued bond. A conventional Swiss bond exists as a book-entry security at SIX SIS AG, Switzerland’s central securities depository; a blockchain token that merely represents or references that book-entry position does not qualify as a Registerwertrecht. The distinction matters legally: only a genuine Registerwertrecht benefits from the DLT Act’s full legal regime — including the rules on legal transfer by blockchain transaction, pledge creation by register entry, and insolvency segregation under the amended Banking Act.

How a Digital Bond Differs from a Traditional Bond

A traditional Swiss bond involves multiple infrastructure layers that a Registerwertrecht collapses:

The most commercially significant difference is settlement timing. Atomic settlement — where the cash and securities legs of a transaction settle simultaneously and irrevocably — eliminates the two-day window in which traditional settlement operates and during which counterparty credit risk accumulates. For institutional fixed-income investors, atomic settlement also eliminates settlement fails, which generate direct costs and operational overhead in traditional markets.

The programmability dimension is equally significant but more prospective. A Registerwertrecht bond can carry smart contract logic that automatically executes coupon payments on defined payment dates, automatically applies withholding tax at source, or automatically enforces transfer restrictions (for example, blocking transfer to non-KYC-verified addresses). These automation capabilities are technically available today; the extent to which issuers deploy them depends on the platform chosen and the willingness of investors to operate in a fully automated payment environment.

Step-by-Step Issuance Process

Step 1: Determine Whether a Registerwertrecht Structure Is Appropriate

The first decision is whether the transaction justifies the additional setup complexity of a Registerwertrecht versus a conventionally issued bond. The practical minimum for a digital bond issuance in Switzerland is approximately CHF 10 million — below this level, the legal, technical, and administrative setup costs (legal counsel fees, platform onboarding, ISIN assignment) are unlikely to produce meaningful savings versus traditional issuance. Most landmark Swiss digital bonds have been CHF 100 million or larger.

Issuers best suited to Registerwertrecht bonds include: financial institutions with existing FINMA-supervised relationships, corporates with investor bases familiar with DLT securities, and supranational or quasi-government issuers seeking to demonstrate innovation in their capital markets programmes.

Step 2: Select the Platform

Two principal routes are available for Swiss digital bond issuance:

SIX Digital Exchange (SDX) is the FINMA-licensed DLT trading facility — the only regulated DLT exchange in Switzerland. An SDX issuance places the bond on a regulated secondary trading venue from day one, with an institutional participant base of FINMA-supervised Swiss and international banks. SDX uses R3 Corda, a permissioned blockchain where transaction data is visible only to transaction parties. SDX issuance requires participation in the SDX network, which entails contractual and technical onboarding.

Sygnum Bank or AMINA Bank (both FINMA-licensed banks with securities dealer licences) can issue Registerwertrechte using Ethereum-based or other compliant infrastructure outside of SDX. This route offers more flexibility in platform and timing, but does not automatically place the instrument on a regulated secondary trading venue — secondary liquidity depends on bilateral arrangements between the issuer, the bank, and their respective institutional investor networks.

For issuers seeking maximum secondary market access and regulatory clarity, SDX is the standard choice. For issuers seeking flexibility or working with non-SDX investor bases, the bank-led route is viable.

Step 3: Legal Documentation

A Swiss digital bond requires substantially the same legal documentation as a traditional bond, with DLT-specific amendments:

Bond terms (Anleihensbedingungen): The terms must specify that the bond is a Registerwertrecht under Article 973d CO; identify the distributed register by reference (platform, network, smart contract address or equivalent); specify that transfer is effected by blockchain transaction; and address the consequences of fork events (where the blockchain splits into two competing versions).

Issuing agreement: Between the issuer and the platform operator (SDX or the issuing bank), specifying the technical specifications of the register, the registration process, and the responsibilities of the register operator.

Prospectus or information memorandum: Required under FIDLEG (the Financial Services Act) for public offers above applicable thresholds. A DLT securities offering to qualified investors under FIDLEG’s qualified investor exemption avoids a full prospectus requirement, but FIDLEG’s Key Information Document (Basisinformationsblatt) requirement still applies for certain client categories.

Custody agreement: For investors holding through an intermediary (custodian bank) rather than directly on the blockchain, the custody agreement must address the treatment of DLT securities under the amended Federal Intermediated Securities Act (BEG), which provides that DLT securities held by an intermediary receive the same client asset protection as book-entry securities.

Step 4: ISIN Assignment for DLT Securities

Switzerland’s standard ISIN numbering agency, SIX Financial Information (as Switzerland’s National Numbering Agency), assigns ISINs to DLT securities under the same process as conventional Swiss securities, with the ISIN metadata flagging the instrument as a DLT security. The ISIN enables the instrument to be identified in financial market data systems, index calculations, and regulatory reporting — connecting the DLT security to conventional financial market infrastructure even where the security itself is blockchain-native.

ISIN assignment for DLT securities currently takes approximately the same time as for conventional instruments — typically one to two business days following submission of complete instrument documentation to SIX Financial Information.

Step 5: Investor Onboarding and KYC

The Registerwertrecht framework does not modify Switzerland’s AML and KYC requirements. Every investor who acquires a DLT security must be onboarded through a FINMA-licensed financial intermediary that has satisfied its obligations under the Anti-Money Laundering Act (AMLA/GwG) — including client identification, beneficial ownership verification, and ongoing transaction monitoring.

On SDX, investor KYC is performed at the participant level: all SDX participants are FINMA-supervised financial institutions that have completed their own AMLA onboarding with their clients. End investors access the DLT securities market through their SDX-participant bank or custodian, not directly on-chain.

For direct wallet-based participation (where a sophisticated institutional investor holds DLT securities in their own blockchain wallet rather than through a custodian), the FINMA-licensed issuing institution must complete full KYC on that investor before any allocation.

Step 6: Settlement and Post-Issuance Administration

Primary settlement: On SDX, the initial allocation of DLT securities to subscribers is recorded by SDX on the Corda platform. Cash proceeds are settled through conventional payment rails (RTGS via SIC) concurrently with the on-chain securities delivery.

Coupon payments: Currently, coupon payments on most Swiss digital bonds are made through conventional payment instruction processes to registered holders’ payment accounts, with the register entry used to identify entitled holders. Full smart contract automation of coupon payments — where the contract automatically credits all registered holder wallets on payment dates — is technically available but requires additional infrastructure for fiat-to-blockchain payment conversion.

Redemption at maturity: Principal repayment follows the same process as coupon payment. On the redemption date, the DLT securities are cancelled on the register (the blockchain tokens are destroyed or locked) against receipt of the principal repayment.

Costs vs. Traditional Bond Issuance

For a CHF 100 million digital bond on SDX, the cost structure versus a traditional CSD-settled issuance is approximately:

Higher initial costs: Legal counsel with DLT securities expertise (notably scarcer and more expensive than conventional bond counsel); platform technical onboarding (one-time); prospectus adaptation for DLT-specific disclosures. Expect additional legal costs of CHF 50,000–150,000 versus a comparable traditional issuance.

Lower ongoing costs: No CSD fees on transfer or custody (the register is operated by SDX under the issuing agreement rather than billed per transaction in the same way); reduced paying agent costs if coupon automation is deployed; reduced reconciliation costs between the issuer, CSD, and paying agent that are endemic in traditional bond administration.

Settlement cost savings: Atomic T+0 settlement eliminates the cost of managing fails and funding the two-day settlement period, which for institutional fixed-income issuers can be material across a portfolio of issuances.

The net economics are typically positive for repeat issuers — institutions that can amortise the initial setup cost across multiple digital bond programmes. For one-off issuers at the CHF 10–25 million scale, the economics are marginal.

Landmark Swiss Digital Bond Issuances

World Bank bond on SDX (2022): The International Bank for Reconstruction and Development (World Bank) issued a CHF 200 million digital bond on SIX Digital Exchange — the first supranational digital bond on a regulated DLT trading facility globally. The issuance demonstrated that multilateral development banks were prepared to use Switzerland’s DLT infrastructure for real funding transactions.

City of Lugano digital bond (2023): The City of Lugano issued a municipal digital bond on SDX, becoming one of the first sub-sovereign issuers to access the Swiss digital bond market. The Lugano issuance was part of the city’s broader Plan B initiative to position itself as a blockchain-friendly municipality, but the bond itself was a conventional fixed-income instrument structured as a Registerwertrecht — not a crypto-native or speculative instrument.

SIX Group own issuance: SIX Group AG, the parent company of SDX, has issued tokenised bonds on its own exchange. This deliberate act of institutional confidence — the exchange operator using its own platform for genuine funding — remains one of the strongest endorsements of the SDX infrastructure.

UBS and Julius Baer: Switzerland’s major private and commercial banks have issued digital bonds on SDX, demonstrating that the country’s systemically important financial institutions view digital bond issuance as a viable alternative issuance channel rather than an experimental sideline.

Secondary Market Liquidity: The Unresolved Challenge

Secondary market liquidity for Swiss digital bonds remains the market’s most significant constraint. The legal framework supports secondary trading — SDX is a licensed exchange, DLT securities can be freely transferred between admitted participants, and the DLT Act’s rules on transfer and settlement apply with full legal certainty. The constraint is structural:

Limited participant base: Only FINMA-supervised financial institutions can be SDX participants. This limits the universe of potential secondary buyers to Swiss and internationally licensed banks — a narrower set than the total institutional investor universe for conventional Swiss bonds.

Minimum deal size mismatch: Most digital bond issuances have been in the CHF 100–250 million range — large enough to create a meaningful initial investor base but still small relative to conventional benchmark bond sizes (CHF 500 million to several billion for major issuers). Smaller free floats mean thinner secondary markets.

Investor familiarity: Buy-side institutions — insurance companies, pension funds, asset managers — have been slower to establish the operational infrastructure to hold and trade DLT securities than sell-side banks. As buy-side adoption grows, secondary liquidity should improve.

The most consequential near-term development for secondary liquidity would be a permanent wholesale digital Swiss franc (d-CHF) from the Swiss National Bank — demonstrated as technically feasible under Project Helvetia — which would enable fully on-chain DvP (delivery versus payment) settlement without the residual commercial bank credit risk of the current cash settlement arrangements.

International Legal Recognition of Registerwertrechte

A Swiss Registerwertrecht is a security under Swiss law. Its international legal recognition depends on the private international law rules of the jurisdiction of the investor, the issuer, and any intermediary involved in the transaction.

EU: Under the EU’s Financial Collateral Directive and the Settlement Finality Directive, the applicable law for securities held in an account is generally the law of the account’s jurisdiction (lex rei sitae for dematerialised securities). Where a Swiss DLT security is held through a Swiss custodian, Swiss law governs its transfer and pledge — providing full legal certainty for Swiss-law transactions. Cross-border recognition of Registerwertrechte as securities under EU law (MiFID II, UCITS) depends on the specific instrument’s characteristics and whether it qualifies as a financial instrument under EU law.

UK: The UK’s developing digital securities framework — including the Digital Securities Sandbox — is broadly compatible with Switzerland’s Registerwertrecht approach, though no formal recognition agreement exists.

US: Swiss Registerwertrechte held by US investors are typically structured as Regulation S placements (non-US persons only) or Rule 144A placements (qualified institutional buyers), using conventional documentation and registration exemptions. The on-chain nature of the security does not affect US securities law applicability — the relevant question is whether the instrument is a security under US law (it typically is), not how it is technically implemented.

The absence of a multilateral treaty framework for mutual recognition of DLT securities remains a gap that the Swiss-EU bilateral financial services discussions have not yet addressed — a priority issue identified in the Federal Council’s 2025–2026 DLT Act review, as examined in our comparative analysis of the EU DLT Pilot Regime and Swiss DLT Act.

Related Coverage

• Switzerland’s DLT Securities Market: Issuers, Instruments, and the Tokenisation Outlook
• SIX Digital Exchange: The World’s First Regulated DLT Securities Exchange
• The Swiss DLT Act: A Complete Analysis of the World’s Leading DLT Legislation
• Tokenisation: Definition and Asset Types
• Switzerland’s AMLA and Crypto: Anti-Money Laundering Obligations for DLT Businesses

Frequently Asked Questions

What is the minimum deal size for a Swiss digital bond?

The practical minimum is approximately CHF 10 million. Below this level, the incremental legal, technical, and onboarding costs of a Registerwertrecht structure are unlikely to produce net savings versus a conventionally issued bond. Most operational Swiss digital bonds have been issued at CHF 100 million or above.

Does a digital bond require a FINMA-approved prospectus?

Under FIDLEG (the Financial Services Act), a digital bond offered to qualified investors only (banks, insurance companies, pension funds, other licensed financial institutions) falls under FIDLEG’s qualified investor exemption and does not require a full prospectus. However, a Key Information Document (KID/Basisinformationsblatt) may still be required depending on the investor categories involved. Legal advice specific to the transaction structure is essential.

Can a non-Swiss issuer issue a Registerwertrecht?

Yes. The Code of Obligations’ Registerwertrecht provisions apply to the legal instrument created on the Swiss DLT register, irrespective of the issuer’s domicile. A non-Swiss issuer can issue a Registerwertrecht on SDX or through a Swiss licensed bank, governed by Swiss law. The choice of law governing the bond terms, the governing law clause in the issuing agreement, and cross-border distribution restrictions are matters for legal structuring in each specific transaction.

How are coupon payments made on a digital bond?

Currently, coupon payments on most Swiss digital bonds are made through conventional payment instruction processes, using the register as the definitive record of entitled holders. Full smart contract automation — where coupons are automatically distributed to blockchain wallet addresses — is technically possible but requires additional fiat-to-blockchain payment infrastructure. Fully automated coupon payment is increasingly available through SDX and specialist DLT bank platforms.

What happens to a digital bond if the register operator fails?

Under the amended Banking Act, DLT securities held in custody are segregated client assets, protected in the custodian’s insolvency. For DLT securities where the investor is the direct register holder (rather than holding through a custodian), the register itself persists on the distributed ledger even if the original register operator fails — provided the ledger architecture genuinely distributes control among multiple independent nodes, as the Code of Obligations requires. SDX’s operational continuity arrangements, regulated by FINMA under the Financial Market Infrastructure Act, provide additional protection at the infrastructure level.

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.