26 Apr 2018
Switzerland’s financial authority Finma has issued guidance for handling initial coin offerings (ICOs), setting out how it intends to apply rules for enquiries.
At present ICOs are not covered by any specific law in Switzerland, however there are some laws under which they may fall.
Finma analysis indicates that money laundering and securities regulation are the most relevant to ICOs.
“The Anti-Money Laundering Act contains requirements for financial intermediaries including, for example, the need to establish the identity of beneficial owners,” Finma said.
“Money laundering risks are especially high in a decentralised blockchain-based system, in which assets can be transferred anonymously and without any regulated intermediaries.”
Meanwhile, securities regulation is aimed at ensuring that market participants can base their decisions about investments on a “reliable minimum set of information.”
When it comes to payment for ICOs, Finma will require compliance with anti-money laundering regulations and such tokens will not be treated as securities.
Utility tokens that functions solely or partially as an investment in economic terms, however, would be treated as securities, in the same way as asset tokens.
FINMA CEO, Mark Branson csaid: “The application of blockchain technology has innovative potential within and far beyond the financial markets.
“Our balanced approach to handling ICO projects and enquiries allows legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.”
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