Innovation and supervision 2019

FINMA responded to the numerous enquiries concerning “stable coins” ­projects with a supplement to its initial coin offerings guidelines. The FinTech licence has meanwhile also been attracting interest.

Blockchain technology continued to preoccupy ­FINMA intensively and the interest in initial coin offerings (ICOs) remained high (52 enquiries). On the one hand there was an increased focus on projects in connection with “stable coins”, that is, blockchain-based tokens linked to assets, and on the other hand on a diverse range of applications with interfaces to the financial markets that are operated on the basis of blockchain technology. FINMA furthermore dealt intensively with the Libra project and enquiries concerning the FinTech licence that recently entered into force.

FinTech licence

The FinTech licence was introduced by way of an amendment to the Banking Act on 1 January 2019. This new licensing category allows public deposits of up to CHF 100m to be accepted, provided that these deposits are not invested and no interest is paid on them. Furthermore, licence holders can benefit from relaxed requirements in comparison with the traditional banking licence, for instance with regard to the required capital or control functions. The new li­censing category is attracting interest both in Switzer­land and abroad, which is regularly generating enquiries with FINMA. Most of the enquiries received by FINMA came from companies offering services in the payment, bill of exchange and custody service sector and additionally wishing to accept public deposits. As well as several briefings and intended applications, FINMA has already received some proper applications for the granting of a FinTech licence. FINMA expects to grant the first FinTech licence in the first half of 2020.

Enquiries about blockchain-based business models

FINMA published its guidelines for enquiries relating to ICOs in February 2018. Here it defines the minimum information requirements for ICO enquiries and sets out the principles applied; it has also classified the different token types. The number of enquiries in connection with ICOs is now falling significantly. This is due on the one hand to the fact that the number of projects is decreasing owing to the market developments (total of 94 compared with 184 in the previous year), while at the same time the guidelines have created transparency and legal certainty. It is noticeable that an increased number of enquiries are being submitted to FINMA that contain new and challenging legal issues (e.g. concerning “stable coins”).

FINMA is increasingly observing the development of business activities in connection with distributed ledger technology (DLT) and securities. Challenging questions are arising here on all issues concerning the trade, custody and settlement of different token types on various transaction systems. A custody and settlement activity in connection with securities fundamentally poses the question of a possible licensing requirement as central securities depository pursuant to Art. 61 of the Financial Market Infrastructure Act (FinMIA).

In connection with the initiatives for the establishment of DLT-based trading and post-trading services, FINMA is in discussions with a number of initiators. FINMA is particularly assessing here whether the planned services fall within the scope of application of the Financial Market Infrastructure Act (FinMIA). Although new technologies enable multiple infrastructure services (such as trading and post-trading) to be combined, the FinMIA currently envisages the separation of infrastructure services across several legal entities and licence holders due to risk considerations. This means that several different licences for the provision of infrastructure services may have to be obtained for corresponding projects. Not least to take account of the new technological possibilities, the Federal Council has already submitted some proposed amendments to the legal provisions through the blockchain report and the regulatory project for improving the framework conditions for blockchain/DLT. In particular, the DLT trading system is intended to create a new licensing category in the FinMIA for institutions wishing to pool the trading, settlement and custody of securities under a single legal entity.

“Stable coins”

FINMA observed an increase in the number of projects to create so-called “stable coins” in 2019. The aim of such projects is to minimise the fluctuations in value that have until now been typical for cryptopayment tokens such as Bitcoin and Ether by linking the token to specific assets such as fiat currencies, commodities, real estate or securities (see below). For example, the token can convey an entitlement to a franc, a gram of gold, a share in a real estate portfolio or a specific quantity of a commodity.

FINMA published a supplement to its guidelines for enquiries relating to ICOs in September of the reporting year, which contains information indicating how it will assess “stable coins” within its supervisory remit under Swiss supervisory law. FINMA also applies the principle of technology neutrality to its treatment of “stable coins” under supervisory law. It places the focus here on the economic function and the purpose of a token (substance over form) and follows the proven principle of “same risks, same rules” as well as the specific features of each case. In its guidelines, FINMA has divided the “stable coins” into case groups according to the type of linked asset and carried out an indicative classification under supervisory law. The case groups (linked to currencies, commodities, real estate and securities) have in common the fact that due to the usually intended purpose of “stable coins” as a means of payment they are almost always subject to the Anti-Money Laundering Act. Depending on the case group, the question arises as to whether the conveyed entitlements qualify them as a deposit under banking law or a collective investment scheme. If instead of an entitlement there is an alternative stabilisation mechanism, other financial market laws, in particular the FinMIA for the operation of payment systems, can also be relevant.

The supplemented ICO guidelines have been picked up on and debated both by the media and by the various international standard-setting bodies in which FINMA participates. The indicative regulatory classification of “stable coins” has been welcomed in the industry.


On 18 June 2019, Facebook for the first time published public information about the Libra project, which has strong links to Switzerland owing to the fact that the headquarters of the Libra Association are based in Gene­va. How Libra is classified under financial market law and which extra requirements are placed on it, if any, are therefore of substantial importance for both the Swiss financial centre and – should the project prove successful – the protection of financial market participants throughout the world. The project is accordingly being monitored closely at an international level.

In its press release of 11 September 2019, FINMA confirmed that the Libra Association had asked ­FINMA for an assessment of how it would classify the project in regulatory terms under Swiss supervisory law. FINMA states here that a project of this kind would fall under financial market infrastructure regulation and only require a payment system licence in accordance with the FinMIA together with extra requirements. Regulatory requirements for payment systems in Switzerland are based on the prevailing international standards, particularly the Principles for Financial Market Infrastructures (PFMI).

FINMA also stated in its press release that the planned international scope of the project required an internationally coordinated approach, and the work to define requirements (such as for combating money laundering) should also be carried out internationally.

Blockchain financial service providers

In late August, FINMA for the first time granted two blockchain financial service providers each a licence to operate as a bank and securities dealer. As usual, the commencement of business was contingent on various conditions and requirements intended to safeguard an orderly business structure.


FINMA already paid close attention during the licensing procedure among other things to the crypto-­specific risks. The definition of strict criteria and control processes was required in connection with the operational risks. With a view to the safe custody of tokens, the technological infrastructure of the two applicants was subjected to thorough testing, also with the support of the responsible licensing auditors, in order to address sufficiently the increased IT and cyber risks. The business model of the blockchain financial service providers furthermore implies the necessity for close cooperation with external technical service providers. Particular attention was therefore also paid to the outsourcing risks.

Payments on the blockchain

Finally, the anonymity inherent in blockchain technology poses increased money-laundering risks. With this in mind, FINMA states in Guidance 02/2019 “Payments on the blockchain” that it also applies the prevailing Swiss regulations governing the sending of information required in payment transactions in the blockchain sector in a technology-neutral way. With regard to the application of the provisions aimed at combating money laundering, no relaxations versus traditional payments are envisaged. This established practice applies without exception and is thus one of the strictest in the world.

However, exceptions apply where it is not possible to comply with the applicable provisions because there is no system available yet on the blockchain to facilitate the sending of information required in ­payment transactions: for example, the institutions supervised by FINMA may send cryptocurrencies and other tokens to external wallets of their own ­customers who have already been identified and ­accept cryptocurrencies and tokens from such customers.

Collaboration on regulatory project for ­improving the statutory framework for blockchain and DLT

The Federal Council wishes to develop further the statutory framework for blockchain / distributed ­ledger technology (DLT) by means of amendments to federal law. FINMA is actively collaborating with this regulatory project and attaches great importance to technology neutrality and legal certainty. One of the core issues of this regulatory project concerns the segregation of cryptocurrencies during bankruptcy proceedings of the service provider. This is important in view of the absence of public deposits and therefore of any licensing requirement under the Banking Act as long as an asset can be segregated from the bankruptcy assets. FINMA announced its position in its statement on the consultation draft of the Federal Council.

(From the Annual Report 2019)