16.02.2018
791

FINMA publishes ICO guidelines.

FINMA's principles focus on the function and transferability of tokens

In assessing ICOs, FINMA will focus on the economic function and purpose of the tokens (i.e. the blockchain-based units) issued by the ICO organizer. The key factors are the underlying purpose of the tokens and whether they are already tradeable or transferable. FINMA categorizes tokens into three types, but hybrid forms are possible:

  • Payment tokens are synonymous with cryptocurrencies and have no further functions or links to other development projects. Tokens may in some cases only develop the necessary functionality and become accepted as a means of payment over a period of time.
  • Utility tokens are tokens which are intended to provide digital access to an application or service.
  • Asset tokens represent assets such as participations in real physical underlyings, companies, or earnings streams, or an entitlement to dividends or interest payments. In terms of their economic function, the tokens are analogous to equities, bonds or derivatives.

Focus on anti-money laundering and securities regulation

FINMA's analysis indicates that money laundering and securities regulation are the most relevant to ICOs. Projects which would fall under the Banking Act (governing deposit-taking) or the Collective Investment Schemes Act (governing investment fund products) are not typical.

The Anti-Money Laundering Act contains requirements for financial intermediaries including, for example, the need to establish the identity of beneficial owners. The law aims to protect the financial system against the risks of money laundering and the financing of terrorism. Money laundering risks are especially high in a decentralized blockchain-based system, in which assets can be transferred anonymously and without any regulated intermediaries.

Securities regulation is intended to ensure that market participants can base their decisions about investments on a reliable minimum set of information. Moreover, trading should be fair, reliable and offer efficient price formation.

On the basis of the above-mentioned criteria (function and transferability), FINMA will handle ICO enquiries as follows (see also the diagram in the Guidelines, page 8):

  • Payment ICOs: For ICOs where the token is intended to function as a means of payment and can already be transferred, FINMA will require compliance with anti-money laundering regulations. FINMA will not, however, treat such tokens as securities.
  • Utility ICOs: These tokens do not qualify as securities only if their sole purpose is to confer digital access rights to an application or service and if the utility token can already be used in this way at the point of issue. If a utility token functions solely or partially as an investment in economic terms, FINMA will treat such tokens as securities (i.e. in the same way as asset tokens).
  • Asset ICOs: FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements under the Swiss Code of Obligations (e.g. prospectus requirements).

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.

ALL News

  • 28.09.2018
    4 782

    SEC and CFTC Charge 1Broker With Securities Law Violations

    The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are suing a Marshall Islands-based Bitcoin futures firm for allegedly violating federal law reports Coindesk.

    Read More
  • 19.09.2018
    2 565

    New York Attorney General Reports that Crypto Exchanges are Ripe for Manipulation

    Cryptocurrency exchanges are vulnerable to market manipulation and lack standard consumer protections reports the investigation by the New York State Attorney General's office.

    Read More
  • 13.09.2018
    1 261

    FINRA Has Taken Its First Crypto Disciplinary Action

    The U.S. Financial Industry Regulatory Authority (FINRA) has issued its first crypto-related disciplinary action. On 11th of September FINRA filed a complaint against Timothy Tilton Ayre of Agawam, Massachusetts. He was charging with securities fraud and the unlawful distribution of an unregistered cryptocurrency security called Hempcoin. 

    Read More
  • 12.09.2018
    2 194

    South Korean Banks to Limit Services for Crypto Traders without Identity Verification

    South Korean banks are reportedly implementing new measures for crypto traders. They are going to limit the services offered to cryptocurrency traders and investors without identity verification, Korea local news report.

    Read More
Загрузить еще

Contact with us