Ingvarr сейчас в Geneve Switzarland.
Ingvarr has taken part in the Roundtable on ICOs hosted by #FINMA and #CryptoValley Association in Geneva.
FINMA has delivered first-hand clarifications about its approach to ICOs’ assessment and comments on its 2nd Guidelines on ICOs issued in February 2018. The Roundtable was represented by Head Market Division, Head Enforcement Division, Head Strategic Service Division and FINMA’s Fintech-Desk.
FINMA's general approach
Since 2014 the position of Switzerland on regulation of innovative technologies is focused on finding the balance between protection of investors, Swiss financial market functioning and reputation and support of innovations.
For these purposes FINMA:
(i) Pushes for the removal of unnecessary regulatory obstacles for innovative businesses;
(ii) Participates in development of principal-based, technology-neutral (i.e. no preferences for a particular technology, focus on activities of businesses), competition-neutral regulation and supervision;
(iii) Stands for zero tolerance of criminal behavior.
In short, FINMA applies the existing regulations to every ICO and assesses every project on a case by case basis.
The applicable regulations are:
1) Securities regulations;
2) Banking Act;
3) Collective Investment Schemes Act; and AML Act.
It usually takes FINMA 1-2 months to review a project provided for its assessment (depending on the complexity of the case it can be longer). Costs are in the range of CHF 1.500 — 10.000.
For these purposes FINMA:
(i) Pushes for the removal of unnecessary regulatory obstacles for innovative businesses;
(ii) Participates in development of principal-based, technology-neutral (i.e. no preferences for a particular technology, focus on activities of businesses), competition-neutral regulation and supervision;
(iii) Stands for zero tolerance of criminal behavior.
In short, FINMA applies the existing regulations to every ICO and assesses every project on a case by case basis.
The applicable regulations are:
1) Securities regulations;
2) Banking Act;
3) Collective Investment Schemes Act; and AML Act.
It usually takes FINMA 1-2 months to review a project provided for its assessment (depending on the complexity of the case it can be longer). Costs are in the range of CHF 1.500 — 10.000.
Tokens types
FINMA distinguishes 4 types of tokens, such types are not legal definitions:
— Payment tokens = cryptocurrencies.
— Asset tokens = tokens which represent assets such as a debt or an equity on the issuer.
Token is a security when:
(i) They are standardized (i.e. offered for sale in the same structure and denomination);
and (ii) they are suitable for mass trading (i.e. to be placed with more than 20 clients, insofar as they have not been created especially for individual counterparties);
— Utility tokens = the most controversial category of tokens — provide access digitally to an application or service by means of a blockchain-based infrastructure. Unlike SEC, FINMA recognises the existence of utility tokens. Token is a utility token when: (i) its sole purpose is to confer digital access rights to an application or service (i.e. no investment function); and (ii) it can actually be used in this way at the point of issue.
— Hybrid tokens = token which include features of different types. In this case, the requirements are cumulative; in other words, the tokens are deemed to be both securities and means of payment.
Throughout the lifetime of an ICO project tokens can change from one type to another. That’s why FINMA first looks at the qualification of the token just at the point of an ICO. And if tokens change its nature after the ICO — FINMA doesn’t revise its qualification of the ICO activity at the point of the ICO, it just scrutinizes the secondary trading and applies relevant regulations on ICO organiser, ICO intermediaries, etc.
— Payment tokens = cryptocurrencies.
— Asset tokens = tokens which represent assets such as a debt or an equity on the issuer.
Token is a security when:
(i) They are standardized (i.e. offered for sale in the same structure and denomination);
and (ii) they are suitable for mass trading (i.e. to be placed with more than 20 clients, insofar as they have not been created especially for individual counterparties);
— Utility tokens = the most controversial category of tokens — provide access digitally to an application or service by means of a blockchain-based infrastructure. Unlike SEC, FINMA recognises the existence of utility tokens. Token is a utility token when: (i) its sole purpose is to confer digital access rights to an application or service (i.e. no investment function); and (ii) it can actually be used in this way at the point of issue.
— Hybrid tokens = token which include features of different types. In this case, the requirements are cumulative; in other words, the tokens are deemed to be both securities and means of payment.
Throughout the lifetime of an ICO project tokens can change from one type to another. That’s why FINMA first looks at the qualification of the token just at the point of an ICO. And if tokens change its nature after the ICO — FINMA doesn’t revise its qualification of the ICO activity at the point of the ICO, it just scrutinizes the secondary trading and applies relevant regulations on ICO organiser, ICO intermediaries, etc.
FINMA’s role
FINMA is not a legislative authority. Its mandate is limited to supervision over Swiss financial sector. It is great to see that the financial regulator makes so much effort to understand the economic substance of innovations and knows the technologies. FINMA is not in a hurry to pass new legislation and looks into the matter of each and every case, including means of controlled environment of a regulatory sandbox. It widely explains its approaches to the regulation of technology to general public.
That is a very good example of correct and thoughtful policy-making.
That is a very good example of correct and thoughtful policy-making.
