Swiss regulator FINMA has published guidance for issuers of stablecoins, urging them to verify the identity of all persons holding digital tokens linked to fiat currencies.
The Swiss Financial Market Supervisory Authority (FinMarket Supervisory Authority) has published new guidance on the risks and challenges associated with stablecoins for issuers and banks providing collateral. On July 26, the Swiss Financial Market Supervisory Authority (FinMarket Supervisory Authority) published new guidance on the risks and challenges associated with stablecoins for issuers and banks providing collateral. guidanceThe regulator stressed the need for stablecoin issuers to verify the identities of token holders and beneficial owners to mitigate these risks.
“(…) The identity of all persons holding stablecoins must be adequately verified by the issuing institution or by appropriately supervised financial intermediaries.”
Wherever
Speaking about the banking sector, the authority noted that accepting public deposits in exchange for stablecoins often requires obtaining a banking license. However, virtual collateral provided by financial lenders can exempt issuers from this requirement under certain circumstances. Therefore, in an effort to protect depositors, the authority has set minimum requirements for the application of the virtual collateral exception.
For example, in the event of a stablecoin issuer going bankrupt, “each client should have its own claim against the Swiss bank that issued the default guarantee.” Additionally, the default guarantee should cover “at least the total of all public deposits including any interest earned by clients,” the guidelines state.
FINMA’s guidance also referred to the Federal Council’s report, which addresses regulatory issues in the financial sector, noting the need for action to address regulatory gaps in the stablecoin industry, although specific details were not provided.
In Switzerland, stablecoins currently operate under the standard financial services legal framework rather than a dedicated regulatory framework. They are generally classified as either deposits under the Banking Act or collective investment schemes, depending on the management of the underlying assets.