The Romans never saw crypto coming

On March 17 2026, lawyers, token issuers, and RWA builders gathered at Decentral House in Geneva to discuss Switzerland's proposed Federal Council crypto framework.

What followed was two hours of unusually candid conversation about regulation, competitive advantage, and whether Switzerland is about to legislate itself out of the position it spent a decade building.

Here is what the room had to say:

Industry experts gathered for a roundtable discussion at Decentral House, our coworking space in Geneva.

Why the Romans?

The Romans built an empire so dominant they couldn’t fathom it ever coming to an end. They had unquestioned authority and the most sophisticated property rights system of their era. Yet, Rome ultimately fell because it failed to adapt.

For decades, Switzerland was the undisputed empire of traditional finance, and in the early days of Web3, it became the top-tier crypto-friendly jurisdiction. But today, that empire is showing cracks.

Crypto is the first asset class in history that you can carry in your head across any border. No bank, no notary, no physical certificate. Ownership is purely cryptographic. A private key can be memorised and used to transact anywhere without an institution's permission. Even Rome couldn't conceive of owning value with nothing but information.

Switzerland built the 20th century's most sophisticated financial privacy architecture. The question now is whether the "Swiss empire" can adapt to this unprecedented asset, or if it is about to regulate itself out of its own top-tier status.

Whitelisting vs Blacklisting

Switzerland's new stablecoin AML regime replaces whitelisting with blacklisting.

This matters because the difference is fundamental: whitelisting requires every token holder to be KYC'd before they can receive or transfer tokens, which kills secondary markets.

Blacklisting only requires blocking wallets already linked to criminal activity or sanctions.

Industry pushed hard for this shift. They largely got it.

But the new framework also requires "active monitoring with mandatory action", meaning issuers must continuously screen all wallets and take action when red flags appear.

In practice, that recreates many of the same constraints through the back door.

The consultation response called it a win, but whether it functions as one depends entirely on how FINMA interprets the ordinance, which the law leaves largely to their discretion.

On-chain transaction flows visualization. Unlike traditional cash, blockchain infrastructure allows for the permanent and public tracing of digital assets

A Hidden Swiss Competitive Advantage: The SRO Model

Crypto service providers in Switzerland have operated under self-regulatory organisations (SROs) like VQF, SO-FIT, and others.

The SRO model has a specific logic that gets underappreciated in regulatory debates: SROs compete with each other for affiliates.

That competition keeps them fast, responsive, and incentivised to provide good service.

If an SRO becomes bureaucratic or slow, affiliates move to another one.

The result? Response times under SRO supervision range from days to two weeks.

The proposed framework moves direct supervision to FINMA, where response times for routine matters typically take six to eight weeks.

To be fair, this timeline can actually be considered fast for a national regulator, especially considering France's equivalent regulator takes up to six months for CASP applications.

The challenge is not necessarily the timeline itself, but rather priority and scale.

The new legislation does not differentiate between big providers and small providers. Under direct FINMA supervision, small financial players are subject to the exact same processes as the systemic ones.

A thousand dollar question from a small builder is placed in the same regulatory queue, and can take just as long to resolve, as a billion dollar question from a major bank. This lack of proportionality disproportionately puts smaller actors at risk, as they rely on agility to survive.

One participant who operates a gold token under VQF said it plainly:

"If we have a question or an issue, we get a response in a week or two weeks. Quick for FINMA is six to eight weeks, which is a lot different."

The SRO model was not a gap in Swiss regulation. It was a feature that ensured small players received the dedicated bandwidth they needed to operate safely and competitively.

The Swiss Finish Strikes Again

Switzerland looked at MiCA (the EU's Markets in Crypto-Assets framework) to adapt the stablecoin and service provider components, and then diverged enough from the original to make them incompatible.

There is even a name for this in Swiss legal circles: the"Swiss finish."

It refers to the habit of taking a European regulatory framework, simplifying it for Swiss use, then adding a local modification that inadvertently breaks cross-border equivalence.

It has happened repeatedly in financial services. Swiss asset managers, Swiss fund distributors, Swiss banks; none have passporting rights into the EU.

They operate through subsidiary structures and bilateral workarounds instead.

Swiss crypto players have historically run dual structures: one entity in Switzerland, one in an EU jurisdiction, with largely copy-paste compliance frameworks.

Under the new rules, Swiss and EU definitions diverge enough that those become two genuinely different regulatory regimes within one organisation, doubling compliance costs for any firm that wants to operate on both sides of the border.

Switzerland has 8 million people. The EU has 450 million. Interoperability is not a nice-to-have.

The jurisdictional divide: Switzerland's evolving regulatory framework versus the European Union's MiCA standards.

The Regulation Doesn't Cover Its Own Best Example

Frankencoin is the largest CHF-pegged stablecoin issued by a Swiss entity. It is structured as an association.

The proposed payment institution framework requires a corporate structure and CHF 25 million in issued assets. Frankencoin qualifies under neither condition.

The new regime (designed specifically to regulate CHF stablecoins) does not cover the most prominent CHF stablecoin currently in existence.

This is the paradox in one sentence: banking-level regulation, written around a use case that doesn't yet exist at scale, missing the one that does.

Banks Can't Issue Stablecoins Directly Either

A fully licensed Swiss bank wanting to issue a CHF stablecoin under the proposed framework would need to spin up a separate subsidiary, get it licensed as a payment institution, and navigate FINMA approval from scratch, despite already being subject to full Swiss banking supervision and AML compliance.

In Europe and the US, banks are permitted to issue e-money tokens directly. In Switzerland, the country of the fully licensed bank, they are not.

The AML Argument Is Weaker Than It Looks

The “criminal use” framing surfaces in every crypto regulatory debate. It deserves a direct response.

According to Chainalysis's annual crypto crime report, less than 1% of crypto transactions are linked to criminal activity.

Of that fraction, approximately 80% is ransomware.

Large-scale drug trafficking, human trafficking, and sanctions evasion continue to move primarily through cash and correspondent banking.

This isn’t because bad actors prefer tradition, but because blockchain is genuinely poor infrastructure for crime:

Blockchain transactions are permanent and publicly traceable. Every transaction is recorded on an immutable ledger, visible to anyone with the right forensic tools.

OFAC-linked address screening, token freezing capabilities, and on-chain analytics give regulators and issuers more real-time visibility into crypto flows than they have into most wire transfers. Tether, Circle, Paxos, and others freeze sanctioned wallets routinely.

If the AML case for tighter crypto regulation is weak, the question becomes: what problem is the new framework actually solving?

Illicit activity accounts for less than 1% of all crypto transactions volume. Source: Chainanalysis 2025 Crypto Crime report

Projects Don't Always Disappear. They Move.

Jurisdiction shopping is not hypothetical. A major German crypto custodian, facing increased regulatory burden, closed its German operation and relocated to Canada.

Swiss projects have done the same, moving legal entities to Liechtenstein, the Cayman Islands, or EU jurisdictions with clearer MiCA pathways.

Two companies present at the roundtable had chosen Switzerland specifically for RWA tokenization; one in aerospace assets, one in physical gold.

Both said the same thing: Switzerland works as a base, but the product has to be globally operable from day one. If the regulatory framework makes EU interoperability harder, that calculation changes.

As one participant summarised:

"If the Swiss system doesn't help us scale, we'll do what other projects have done. I don't personally want to move to the Cayman Islands. But you see it happening."

The Question Switzerland Hasn't Answered

Is there evidence that the current SRO-based system is producing a money laundering or consumer protection problem in Swiss crypto? No one in the room could identify any.

FINMA has not published enforcement cases suggesting systemic failure at VQF or SO-FIT affiliated entities.

The Swiss Blockchain Federation and Crypto Valley Association, in their joint consultation response, found no such evidence either.

If the problem doesn't exist at scale, increasing the regulatory burden doesn't solve it. It raises the cost of operating in Switzerland relative to jurisdictions with lighter or better-calibrated frameworks.

Switzerland wanted to be the crypto nation. Zug earned that reputation, and the DLT Act introduced genuine legal innovation. The groundwork is real.

But competitive advantage in regulation works the same way it works in product: you have to keep earning it. The proposed framework, in its current form, gives ground without a clear reason to. The consultation period has closed, but the Federal Council is revising the draft, meaning the window for getting this right is closing but not yet shut.

The Romans never saw their empire coming to an end until it was already happening. Switzerland built a formidable financial and crypto empire, but past dominance doesn't guarantee the future. It still has a chance to adapt before it accidentally legislates its own decline.