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FINMA Issues Stablecoin & ICO Guidelines Following Request from Facebook's Libra

Will the Swiss Financial Market Supervisory Authority Assist Libra?

2019-09-11 08:07:50 | Jonathan Ganor

 

FINMA is one of the most important financial authorities in Europe. The Swiss based financial market supervisory makes decisions that take immediate effect in Switzerland's financial regulation. At times FINMA's rulings are used as a regulatory precedent in other parts of Europe.

Facebook's cryptocurrency project, the Libra Association has recently approached FINMA for regulatory guidelines. Facebook's Libra has had notoriously tough times with both American and European financial regulators. FINMA complied with Libra's request and earlier today released guidelines on both ICOs and Stablecoins.

 

FINMA on Stablecoins

It states in their guidelines that their classifications might change in the future. Despite this government & regulatory change are notoriously slow. It becomes clear reading the document that stablecoins do not face any significant risk from regulators. They are required however, to comply with high AML/KYC standards and to work in the existing regulatory system in Switzerland.

Stablecoins in Switzerland would require a payment system license from FINMA to operate. For certain crypto programs and coins that operate somewhat like banks would require a banking liscence. This is referred to as 'same risks – same rules'.

FINMA additionally added a supplement to its ICO guidelines from 2018. The supplement specifically refers to new coins/tokens that are stablecoins or linked in value to securities (i.e. real estate, gold)

 

Libra & FINMA

It appears that Libra will need to apply for a banking license to operate is Switzerland. It will also need to comply with strict KYC/AML procedures. In addition to that Libra will face extreme scrutiny by authorities to make sure everything is being managed as it should.

All things considered, FINMA's ruling is vey positive for Libra in comparison to other regulators. Should other European regulators follow step, we might actually see Libra released in Europe.

 


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