Coinspeaker Swiss Regulator FINMA Releases Comprehensive Guidelines for Stablecoins
The Swiss government has today published extensive guidance on the issuance of stablecoins, a type of digital asset backed 1:1 by reserve assets under the country’s supervisory law. According to an announcement on Friday, the Swiss Financial Market Supervisory Authority (FINMA) stated that stablecoins will be treated under the same rules implemented for initial coin offerings (ICO) in 2019.
However, the regulator updated the document to address its concerns regarding the risks associated with stablecoins and their increased use for money laundering, terrorist financing, and the circumvention of sanctions.
Anti-Money Laundering Measures
Due to these concerns, the Swiss regulator mandates all stablecoin issuers within the country to adhere to its anti-money laundering act. The regulator said it reached this decision after considering the investigation conducted by the Financial Action Task Force (FATF) in 2020.
Authorities found during the probe that stablecoins share many of the same potential money laundering and terrorist financing risks as other cryptocurrencies.
FINMA stated that making the anti-money laundering rules mandatory for issuers is important to safeguard investors’ interests. This is because companies usually roll out the tokens as a reliable payment method on the blockchain, backed by national currencies.
For this reason, stablecoin holders generally have a payment claim against the issuers. The regulator explained that the claim is treated under banking laws to ensure the assets remain stable at all times and are fully backed by the reserves.
Identity Verification Requirements
In addition to regulatory compliance, FINMA demands that stablecoin issuers verify the identity of holders at all times.
“In particular, the identity of all persons holding the stablecoins must be adequately verified by the issuing institution or by appropriately supervised financial intermediaries,” the regulator said in a statement on Friday. The regulator specified that all stablecoin issuers under its supervision need to implement measures such as contractual transfer restrictions, know-your-customer (KYC) protocols, and blockchain controls.
The market watchdog believes the implementation of these agreements will help ensure that stablecoins are not transferred to or used by individuals or entities involved in illegal activities. Additionally, the implementation of these strict controls aims to enhance the security and trustworthiness of stablecoins within Switzerland, making the digital assets more attractive to legitimate users and investors.
Embracing Crypto Innovation
Meanwhile, Switzerland is one of many nations in the world embracing crypto innovation and opening its borders to the asset class.
Earlier this year in May, the Swiss government launched a public consultation to adopt internationally accepted standards for crypto taxation. The European nation plans to introduce rules for digital assets tax reporting to “ensure equal treatment” as traditional assets.
The move comes a few weeks after a crypto advocacy group based in Switzerland called on the country’s central bank, the Swiss National Bank (SNB), to add Bitcoin (BTC) as part of its reserve assets.
The activists believe that adding the crypto asset to the country’s reserves will further bolster its independence from the European Central Bank (ECB).
next
Swiss Regulator FINMA Releases Comprehensive Guidelines for Stablecoins