DLT Act & Legal Recognition
Switzerland's landmark 2021 DLT Act and what it means for businesses
The Swiss DLT Act (2021)
Switzerland's Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology — commonly called the "DLT Act" — came into force on February 1, 2021. It represents a landmark in crypto legal development, providing genuine legal certainty for blockchain-based businesses.
Key Provisions
- DLT Securities (Wertrechte): Tokenized securities have the same legal status as traditional securities. Transfer of a DLT security token constitutes valid legal transfer of the underlying right.
- Uncertificated ledger securities: New category allowing companies to issue shares, bonds, or derivatives directly on blockchain without paper certificates.
- Insolvency protection: Client crypto assets held by a bankrupt DLT trading facility are segregated and returned to clients — a critical improvement over previous uncertainty.
- DLT Trading Facility license: New FINMA authorization allowing token trading and settlement on a blockchain.
Practical Implication
A Swiss GmbH can now issue its shares as tokenized securities on a DLT system. This enables equity crowdfunding, fractional ownership, and efficient secondary market transfer — all with full legal backing.
Foundation Law for DAOs
Switzerland's foundation (Stiftung) and association (Verein) legal forms have been used by many DeFi protocols and DAOs to establish legal entities in Switzerland. The Canton of Zug has become a global hub for crypto foundations.