Swiss financial supervisor publishes guidelines meant to support the ICO market by clarifying when anti-money laundering and securities laws apply to them
Financial TimesRalph Atkins
Context & Ripple Effects
This is the second move by the Swiss Financial Market Supervisory Authority on token sales: after issuing initial guidance while investigating at least 11 suspicious cases in September 2017 (guidance alongside a dozen open probes), the supervisor now publishes fuller guidelines spelling out when anti-money-laundering and securities laws attach to an ICO. The intent is explicitly supportive — replacing case-by-case ambiguity with categories issuers can plan against.
ICO issuers in Switzerland get a classification framework — they can now tell in advance whether a token sale triggers securities-law duties or only AML checks, instead of waiting for enforcement to define the line.
FINMA's own enforcement posture sharpens: with the rules published, the suspicious cases it was already investigating become test applications of the new categories rather than free-standing probes.
Second-order effects
Swiss retail and cantonal banks gain cover to serve token issuers, which is exactly what the Bankers Association's account-opening guidelines build on — the supervisor's clarity removes the compliance excuse banks had for blanket refusals.
Other financial centers face pressure to match the clarity: a jurisdiction that publishes workable ICO rules pulls listings, foundations, and advisory work away from jurisdictions still treating every token as a potential security.
Third-order effects
Supervisory guidance of this kind prefigures the global layer — FATF's later identity-checking requirements for crypto firms (FATF's customer-identification guidelines) and IOSCO's proposed global crypto rulebook (IOSCO's first global crypto regulations) extend the same logic from one country's clarification to cross-border standards.
If the pattern holds, token markets consolidate into jurisdictions that publish rules early, with regulators competing on legal certainty the way they once competed on tax — and the 'crypto legitimacy gap' between regulated and unregulated issuance widening accordingly.
The trend: Crypto regulation is moving from reactive enforcement toward proactive supervisory frameworks, first nationally in hubs like Switzerland and then globally through FATF and IOSCO.
Big news: Swiss financial regulator issues guidelines for ICOs and securities classification... And they're pretty reasonable. ‘Crypto nation’ Switzerland issues guidelines to support market http://www.ft.com/... via @financialtimes #bitcoin #ethereum #blockchain
...unless they “additionally or only have an investment purpose at the point of issue.” Sales of pre-functional utility tokens create securities in Switzerland, according to FINMA.
Now for the interesting part: Utility tokens. Utility tokens are tokens which are “intended to provide access digitally to an application or service by means of a blockchain-based infrastructure” - a mouthful but not inaccurate.
Switzerland: Finma identifies 3 categories of ICOs (1) “payment ICOs”: AML regs but are not securities (2) “utility ICOs” confer digital access to a service (3) “asset ICOs” treated like equities, pay dividends, interest or earnings. https://www.ft.com/... via @financialtimes
Switzerland just issued landmark guidance on ICOs and token sales that will influence global policy. Any interest in a tweet tempest breaking down the new rules? https://www.ft.com/...
Holy shit—Switzerland announces reasonable ICO guidelines! ICOs are broken down into three sub-segments: • payments (must comply w AML regs) • utility (not treated as securities) • assets (treated as securities) Link: https://www.ft.com/... pic.twitter.com/oXkJELXPzN
Importantly, any asset token-like elements included in a utility token will make it a security. Makes sense, mostly. Give something the right features of a security and it becomes one.
Interesting to watch countries competing to be the centers of all kinds of #disruptiveinnovation, including #crypto, accelerating adoption and the pace of change. Good news. http://twitter.com/...
Summary of Switzerland's ICO guidelines: 1. Payment ICOs - comply w/ anti-money laundering & not securities 2. Utility ICOs - not security as long as actual utility 3. Asset ICOs - definitely security & have to fully comply w/ regulation They were 1st government. Not the last
I'm no Swiss lawyer, but I didn't see FINMA's advice as being particularly encouraging, you guys. In very general terms, there's a very narrow space in which a token can be tradable and publicly transferable and not a security at the same time. A lot of tokens don't fit in it. ht…
Sounds pretty pragmatic. This plus the Code of Conducty to be discussed also at http://www.cryptomountain.rocks/ in Davos (22-25March) by experts from @thecryptovalley Subscribe now. http://twitter.com/...