Swiss Financial Supervisor Publishes Guidelines To Support ICOs

Francisco Memoria
  • Switzerland's financial watchdog recently published guidelines to support ICOs in the country
  • Guidelines define three different ICO categories to help entrepreneurs
  • Regulator will regulate ICOs under anti-money laundering laws and as securities

Switzerland’s financial supervisor, the Financial Market Supervisory Authority (FINMA), recently published guidelines in support of initial coin offerings (ICOs). The regulator’s guidelines reveal it will treat some tokens as securities.

Through a press release, FINMA revealed it has been witnessing a substantial rise in the number of ICOs launching in Switzerland, which led to a spike in inquiries it’s been receiving about applicable regulations. The press release starts by clarifying financial market laws and regulations aren’t applicable to all ICOs. As such, the applicability of regulations to blockchain-based tokens will be determined on a case-by-case basis.

FINMA’s guidelines reveal the organization will focus on the economic purpose of the tokens ICOs will issue, as well as on the “underlying purpose of the tokens and whether they are already tradeable or transferable.”

Taking this into account, FINMA outlined three different ICO categories, based on the purpose of their underlying tokens. These categories include “Payment ICOs,” “Utility ICOs,” and “Asset ICOs.”

Payment ICOs would issue payment tokens, which are only to be used as a payment method. Utility tokens, issued in Utility ICOs, are “tokens which are intended to provide digital access to an application or service.” Asset tokens, issued in Asset ICOs, represent participation in a company or earning stream, or “an entitlement to dividends or interest payments.”

These guidelines are set to help entrepreneurs know when they will have to apply anti-money laundering and securities laws. Payment ICOs will have to comply with anti-money laundering (AML) regulations, while Utility ICOs will quality as securities if their tokens “function solely or partially as an investment in economic terms.” 

FINMA CEO Mark Branson commented the organization’s move, stating:

“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.”

Mark Branson

FINMA will see asset tokens, issued in Asset ICOs, as securities, as these represent participations in companies or earning streams, or an entitlement to dividends or interest payments.

The regulator further recognized hybrids can exist, meaning one ICO can be included in more than one of the above categories. According to the Financial Times, Oliver Bussmann, president of the Crypto Valley association in the canton of Zug, predicted FINMA’s guidelines will increase the number of Switzerland-based ICOs. He said:

“It’s about establishing a sustainable business in Switzerland – and not just about raising capital and moving on. If you remove uncertainty, it attracts more business.”

Oliver Bussmann

UK Opens $130,000 Contract to Catch Crypto Tax Evaders

  • The HMRC has opened a contract worth £100,000 for the creation of software that can detect crypto tax evaders.
  • Special preference is being given for tools targeting privacy coins such as Monero.

The United Kingdom has offered a contract worth £100,000 ($130,000) for software that can identify when cryptocurrency is used to avoid paying taxes. 

According to the contract posted by HM Revenue & Customs (HMRC), the organization is seeking a tool that will “support intelligence gathering methods” for identifying and clustering cryptoasset transactions and linking to their service providers.

The contract claims the tool must be capable of tracking bitcoin, bitcoin cash, XRP, USDT, ethereum and ethereum classic. Preferential treatment will be given to developers capable of creating a tool that can analyze private cryptocurrencies, such Monero. 

The contract reads, 

Crypto assets, such as Bitcoin and Ethereum, provide a means to transfer value between interacting parties.  Also known as virtual and crypto currencies, these services are increasingly used for a range of purposes, from international money transfers, sales of digital services, paying staff and tax evasion and money laundering.

HMRC is one of the UK’s largest organizations, with 60,000 full-time equivalent staff working to collect taxes.

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