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Swiss Financial Market Supervisory Authority Publishes ICO Guidelines


On 16 Feb 2016, Swiss Financial Market Supervisory Authority (FINMA) published a set of guidelines as to how it intends to regulate ICOs. FINMA also said that the guidelines “also define the information FINMA requires to deal with such inquiries and the principles upon which it will base its responses. “Creating transparency at this time is important given the dynamic market and the high level of demand,” says FINMA.


According to FINMA, the number of ICOs unveiled in Switzerland has increased in lips and bounds thus the number of inquiries about their stability and applicability. The published guidelines are set to provide more clarity on the Switzerland stance toward the ”ICOs” hot fundraising method in which the nation has become a global icon but whose regulators are yet to weighed insignificantly.


Each case must be decided on individual merits

Not all ICOs are applicable for the current financial market law and regulation schemes. If they are designed to adhere to regulation systems, FINMA will consider it on a case-by-case basis. There is currently no ICO-specific regulation, and only a few ICOs are subjected to financial market regulation after a circumstantial approval by the FINMA.


FINMA’s principle focus on the function and transferability of tokens

To determine its functionality, FINMA has created an assessment to categorize the ICOs into three types of tokens – payment tokens, utility tokens, and asset tokens. Payment tokens can be inferred as cryptocurrencies and can act as a form of payment. Utility tokens act a key to provide access to different application and services. Asset tokens act similarly to bonds and equities,


Focus on anti-money laundering and securities regulation

FINMA analysis reveals that securities regulation and money laundering are the most significant concerns to ICOs. The report further indicates that projects, which would fall under the collective Investments schemes Act or Banking Act, are not typical.To prevent money laundering, FINMA requires creators of ICOs to provide financial intermediaries. This can eliminate fraudulent systems and can create a layer of protection for market participants.FINMA has different methods to handle the different ICO inquiries. For payment ICOs, anti-money laundering regulations would be enacted. For utility ICOs, FINMA will treat them as securities if the functions of the token act as a form of investment. For assets ICOs, FINMA will treat these tokens as securities, meaning they must pass the securities law requirement and the civil law requirements.


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