Saturday, February 4, 2023

Swiss Watchdog: We’ll Regulate Some ICOs as Securities

Swiss Watchdog: We’ll Regulate Some ICOs as Securities

The Swiss Financial Market Supervisory Authority (FINMA) has asserted it will regulate the booming fundraising trend of  initial coin offerings (ICOs) using existing laws. It will evaluate tokens’ purpose on a case-by-case basis to determine what laws apply, treating some as securities. 

Also see: Coinbase and Visa Clash Over Who Caused Duplicate Card Charges

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A federal republic in Europe with liberal financial and privacy laws, Switzerland has become host to many ICOs and is the leading country to embrace the new form of fundraising. Today’s announcement could increase requirements for projects planning to base themselves there.

Switzerland, as opposed to Asian countries like China and India, has been open to new technologies — especially blockchain and cryptocurrencies. Recently, Johann Schneider-Ammann, head of  Federal Department of Economic Affairs, Education, and Research, said he wishes the country to be a “crypto-nation.”

Switzerland – the Hub for ICOs

The cryptocurrency boom of last year played an important role in attracting many investors into the space, which in return escalated interest for upcoming ICOs. According to research and analysis firm Smith + Crown ICOs are big business, raising $3 billion USD in 2017.

According to leading audit and advisory firm PwC, four out of the top 10 proposed ICOs were based in Switzerland.

In July, the Switzerland based Tezos ICO raised $232 million. However, the Swiss Tezos Foundation is facing multiple lawsuits from disputes over technical capabilities and governance. It is yet unclear if the new regulatory guidelines will affect Tezos and other ICOs that have launched in the past.


Kevin Murcko, CEO of digital asset exchange CoinMetro, said of Switzerland’s plans:

“It’s high time that a major European regulatory body broke cover on its plans. By embracing regulation, Switzerland’s financial watchdog has delivered a positive show of faith in the cryptocurrency space. It comes as ICOs are booming as a fundraising method for Swiss start-ups.”

Murcko added that, to form regulation for the crypto space; it is a must to involve businesses linked to the crypto industry. CoinMetro itself is also running an ICO, for its new business which includes an exchange, a trading platform, and a turnkey ICO Express framework.

A Positive Step Forward for ICOs

FINMA stated that ICOs might be regulated under financial market regulations conditional to the attributes of each token.

On February 16th, chief executive Mark Branson stated that the “balanced approach” in regulating ICO fundraising projects would allow “legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.”

The new guidelines aim to offer protection to ICO investors from frauds that have flooded the crypto space. Switzerland aims to be the benchmark in regulating the crypto industry in a balanced manner.

Japan is another country that has taken a permissive approach, while maintaining tight controls over what projects are allowed to proceed.

Will other European countries follow the same road as Switzerland? Let us know your opinion in the comments section.

Images via Pixabay

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