In new guidance, the Swiss Financial Market Supervisory Authority FINMA explains how it assesses the risks associated with the custody of cryptobased assets. The guidance sets out the rules that institutions must abide by in order to keep cryptobased assets safe.
FINMA is seeing increasing interest in cryptobased assets and related services in the Swiss financial market. More and more customers want to trade, invest and securely store cryptocurrencies, among other things. FINMA-supervised institutions have therefore expanded their offering in these areas.
In its new guidance, FINMA draws attention to the particular risks associated with the safekeeping of cryptobased assets such as Bitcoin or Ether. These arise because of the associated technology (distributed ledger). Expertise and a robust technical infrastructure are needed to mitigate these risks. If the custody takes place abroad, additional complex legal issues may arise – especially if the custodian becomes insolvent. Among other things, it must be ensured that customers’ cryptobased assets do form part of the custodian’s bankruptcy assets.
FINMA’s guidance makes it clear: To ensure that cryptobased assets can be stored securely, appropriately monitored providers are needed – in Switzerland and abroad – as well as clear rules offering protection in the event of bankruptcy. Responsibility shall remain with the authorised financial institutions in the event that such providers are used.
