FINMA Introduces New Regulations For Its Crypto Industry
Switzerland’s regulatory authority introduced a new set of cryptocurrency regulations on Friday. Notably, the Swiss Financial Market Supervisory Authority (FINMA) has classified the crypto regulations into three broad categories. The categories are: “asset tokens”, “payment tokens”, and “utility tokens”. Presumably, they’ve been put together based on the findings of various entities in the Swiss Confederation that had been actively working on developing a regulatory framework for digital currencies.
According to FINMA, asset tokens can be thought of as crypto’s version of stocks and bonds where the tokens represent “assets such as participations in real physical underlying, companies, or earnings streams, or an entitlement to dividends or interest payment”. Payment tokens are defined by the Swiss watchdog as the actual cryptocurrency, which can function as a store of value and a medium of exchange. Per FINMA, digital tokens are “intended to provide digital access to an application or service”.
A Balanced Approach To Crypto-Regulations
The Swiss regulator stated that main goal of this new framework is to adopt a more “balanced approach” in which the financial risks of ICOs are mitigated, while not hampering their “innovative potential”. Although the obvious risk factor associated with ICOs is the extreme volatility of the cryptocurrency market, a large number of scams have also been carried out, resulting in huge financial losses for the unsuspecting investors.
In addition to ICO scams, FINMA is also aware of cryptocurrencies widely being used for illegal purposes such as money laundering. In fact, as Core Media reported, up to £4 Billion has been laundered throughout Europe using digital currencies such as Bitcoin. Even though this only constitutes an estimated 3-4% of Europe’s black money market, the use of cryptos in aiding illicit activities has been growing rapidly. Therefore, FINMA and other regulatory bodies around the world have committed themselves to curb this alarming trend.
FINMA’s Crypto-Regulations Will Help Financial Markets
Although the Swiss watchdog has vowed to stop criminals from using cryptos to conduct illegal activities, it’s not the only objective behind its new crypto regulations. Notably, the Financial Times reports that the nation’s regulator intends to offer practical support to further develop Switzerland’s booming ICO market and emerging blockchain technologies. With its updated crypto guidelines, FINMA seeks to clarify which set of laws a business needs to follow when dealing with crypto-related securities, or making sure its in compliance with anti-money laundering rules.
Johann Schneider-Ammann, the Swiss finance minister, believes that the country should continue to maintain a crypto-friendly approach. In fact, he stated last month that he’d like Switzerland to become “the crypto nation”. It seems that his country is well on its way to become a leader in the cryptosphere when you consider that 4 out of the 10 largest ICOs launched so far have originated in the world’s most “neutral” place.