Switzerland is falling behind in international competition for digital financial markets. That is the pointed message of a new benchmark report by the Swiss Blockchain Federation and the accompanying finews article. Sixth place instead of world leadership; too little speed, too small a market, too little international connectivity. That is a useful warning sign. It is not a requiem.

Swiss strengths

A ranking is not a law of nature. The report works with evidence-based expert assessments and weighted categories. Fifteen percent each is allocated to implementation speed, market size and liquidity, as well as AI × blockchain and talent. Those who weight these factors heavily will inevitably rank a small, cautious financial center lower. The report's own sensitivity analysis places Switzerland — depending on plausible weighting — between fourth and eighth place. The more precise conclusion is therefore: Switzerland still belongs to the extended top group, but it is no longer undisputedly among the top three.

"Our problem is less the foundation than its commercial use."

In any case, the decisive point is not the ranking number. The report gives Switzerland top marks for DLT infrastructure, regulatory clarity, legal finality, banking, custody and geopolitical stability. With the digital settlement and custody functions continued at SIX, BX Digital, specialized banks, universities, foundations and consultants, the financial center has building blocks that cannot be quickly copied elsewhere.

This assessment is also based on direct practical experience: Allegra LAW has advised both SIX Digital Exchange (SDX) and BX Digital on their regulatory authorization projects. Our problem is less the foundation than its commercial use. Switzerland has a conversion gap — a gap in translating regulatory strength into scalable applications and international business.

The ICO boom was not a lost golden age

Nostalgia does not help here. The ICO boom contained a great deal of regulatory packaging skill and numerous business models without any solid benefit. The disappearance of some of them is not a defeat for the location, but market correction. At the same time, it would be wrong to dismiss all projects from that period as gimmicks. Legitimate experiments created know-how, infrastructure and experience that now enable serious regulated applications.

The Finma was active early on. With its ICO guide of February 16, 2018, it translated new token models into existing protection principles. The oft-cited "duck test" — what matters is the economic function, not the technological label — was not a rejection of innovation, but a sensible substance-over-form approach. The reverse conclusion, however, would be wrong: what does not look like a familiar duck is not automatically unsuitable. New models may require new classifications and a supervisory approach that learns along the way.

"Procedures that drag on for years can render even a good business model economically obsolete."

At Finma, innovation has evolved from a side issue to a strategic goal and today to a cross-cutting principle of technology-neutral, risk-based supervision. For 2017 to 2020, Finma announced that it would remove unnecessary regulatory obstacles for innovative business models. From 2021 to 2024, promoting innovation was its own strategic objective. In the 2025 to 2028 strategy, innovation no longer appears as a separate headline goal, but it remains part of the mandate: technological progress should be usable in a safe environment; regulation and supervision should be applied transparently, in a risk-oriented and technology-neutral manner. This development contradicts the image of an authority that is fundamentally hostile to innovation. But it does not relieve Finma of its duty to implement this aspiration through predictable and efficient procedures.

Criticism of Finma is justified — monocasuality is not

The finews article and the Swiss Blockchain Federation criticize, in particular, lengthy and unpredictable procedures. Of course Finma must improve. Innovative companies need clear responsibilities, realistic timelines, proportionate requirements and reliable decisions. Procedures that drag on for years can render even a good business model economically obsolete. If procedures show hardly any visible progress over long periods, it also becomes difficult for advisers to recommend the costly licensing route to their clients. That can — and should — be criticized.

But it is too convenient to saddle the supervisory authority with full responsibility for market size, liquidity, internationalization and implementation. The management of the Credit Suisse crisis explains why system stability claimed top priority. But it is neither a proven reason for every delayed fintech process nor a permanent excuse. That said, responsibility does not end there: Finma cannot create a global sales market, nor can it take away from banks and companies the entrepreneurial decision to finance viable pilot projects and move them into regular operations. Politics
is responsible for internationally compatible framework conditions; banks and companies for implementation; advisers for viable structuring.

Lawyers belong in the front line

Especially as lawyers, we must not limit ourselves to explaining why something cannot be done. Good advisory work develops the regulated business model together with the client. Roles, payment flows, capital and liquidity structure, custody, customer segment and jurisdiction are often not immutable natural givens. They can be designed so that an idea becomes a legally robust and economically viable model.

"The financial center will not become stronger by forcing every international business model into a purely Swiss form."

This also requires thinking geographically. The Swiss market is small; that is a structural fact, not a supervisory flaw. The answer is international connectivity. A licensing strategy can combine Swiss law, infrastructure and governance with EEA market access via Liechtenstein or with specialized partners in other financial centers. This is not an escape into the weakest regulation, but lawful jurisdictional design: the appropriate function is anchored where the regulatory framework and the market can meaningfully support it.

The financial center does not become stronger by forcing every international business model into a purely Swiss form. It becomes stronger when Swiss quality becomes the reliable core of an international structure.

Stablecoins show what is at stake now

USD stablecoins are a concrete example. Almost 99 percent of stablecoin market capitalization is denominated in US dollars. That does not end global de-dollarization. But it does create a new form of digital dollarization: access to dollars outside traditional banking channels, near-instant settlement and a growing structural demand for highly liquid dollar assets, including short-term U.S. Treasuries.

Nüchternheit is also needed when it comes to volume figures. The often-cited annual on-chain volume of around 30 trillion U.S. dollars are gross figures. Visa put the annual volume, adjusted for bots, internal transfers and similar activity, at around 6.4 trillion U.S. dollars. That is significantly less than the headline figure — and still large enough to take stablecoins seriously as real financial infrastructure.

Switzerland does not have to be the primary issuance location. It can win in custody, governance, tokenization, settlement and cross-border structuring. Trade finance is particularly promising. Switzerland is a global hub for commodities; international supply chains are often dollar-based and require liquidity, speed and traceable settlement. There is still no evidence of broad market maturity for stablecoins in Swiss commodity trade finance. That is precisely why clearly defined applications should now be moved from pilot to production — with a clean reserve, AML, sanctions, custody and legal architecture.

From regulatory center to business center

The mandate is therefore clear. Finma owes predictable procedures and a proportionate, adaptive practice. Politics must enable international connectivity instead of confusing technology with location romanticism. Banks and companies must finance robust pilot projects and turn them into real products.

And we advisers must help develop business models, build international collaborations and thus create legal bridges between markets. Lamenting the declining relevance of the financial center is allowed. Criticism of the regulator also belongs in an open debate about the financial center.

But neither replaces implementation. Switzerland is not losing because it lacks ideas or legal certainty. It only loses ground if it fails to translate its strong rules into marketable applications and international business.

Marcel Hostettler, attorney, founder and managing partner, Allegra LAW (Zurich/Vaduz). Through his previous work at Finma, he has direct supervisory experience and is a member of the Regulatory Board of SIX Exchange Regulation.

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