While various financial regulators around the world are imposing a crackdown on bitcoin, the Swiss Financial Market Supervisory Authority (FINMA) has decided to promote digital currencies by issuing some guidelines on the initial coin offerings (ICOs).
According to FINMA, Switzerland has recently observed rapid growth in the number of upcoming ICOs that are planned to be launched in the country, as well as various inquiries regarding the regulation of cryptocurrencies. In a bid to encourage the blockchain technology and the ICO market, FINMA has clarified how the standards around securities regulations and anti-money laundering could be applied to the virtual currencies.
Mark Branson, the chief executive of FINMA, stated: “The application of blockchain technology has innovative potential within and far beyond the financial markets. However, blockchain-based projects conducted analogously to regulated activities cannot simply circumvent the tried and tested regulatory framework.”
The CEO stressed: “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.”
In assessing the ICOs, the regulator will concentrate on the economic function and purpose of the tokens, or the blockchain-based units, that are issued by the organizer. As the current regulatory base requires a generally recognised terminology for the classification of tokens both internationally and in Switzerland, the FINMA was able to categorise tokens and the ICOs of those tokens into three categories namely: utility tokens, asset tokens, and payment tokens.
The press release stated: “ICOs can also exist in hybrid forms of the above categories. For example, anti-money laundering regulation would apply to utility tokens that can also be widely used as a means of payment or are intended to be used as such.”
Earlier in 2018, South Korea imposed a ban on the use of anonymous bank accounts in cryptocurrency trading amid deep fears regarding potential money laundering and other crimes. At the same time, a senior official from the People’s Bank of China called for a blanket ban on the services that are related to cryptocurrency trading in the country.