FINMA stated that it is important to use anti-money laundering rules for issuers in order to protect investors effectively. The Swiss government has published more detailed guidance on the use of stablecoins, and it has said that reserve assets must fully back these particular tokens on a 1:1 basis.
As of FINMA’s recent statement, stablecoins will be regulated in the same manner as initial coin offerings, which have been regulated since 2019.
The regulator amended the document to respond to the issues, which include risks of money laundering, terrorism financing, and sanctions evasion associated with stablecoins.
Strengthening Anti-Money Laundering Controls
Any issuer of a stablecoin in Switzerland must now adhere to anti-money laundering laws. The Financial Action Task Force (FATF) made this decision after analyzing the findings of a 2020 report.
Law enforcement realized that stablecoins have the same risks associated with money laundering and financing terrorism as every other type of cryptocurrency.
FINMA stressed that it is important to ensure compliance with the requirements for the non-acceptance of illicit funds in order to safeguard investors. This is important because companies usually declare stablecoins as reliable means of payment that are fully backed by national currencies.
Owners of stablecoins usually have a payment claim against issuers, which is regulated by banking legislation. This ensures that the assets remain fixed and never drop below their respective reserve requirements.
Enhanced Identity Verification Requirements
FINMA has three regulatory requirements –the issuers must ensure holders’ identity at all times, and the stablecoins are regulated.
“In particular, the identity of all persons holding the stablecoins must be adequately verified by the issuing institution or by appropriately supervised financial intermediaries,”
The regulator explained that stablecoin issuers must follow contractual transfer restraints, apply KYC measures, and use blockchain measures.
This, the market watchdog holds, will help block stablecoins from reaching people or companies whose dealings are unlawful. They also intend to increase security and confidence, thus attracting more legitimate users and investors for the launched stablecoins in Switzerland.
Adopting New Crypto Innovations
Like many other countries in the world, Switzerland has not turned its back on crypto innovation and is home to this asset class.
In May, the Swiss government started discussing how to align the taxation of cryptocurrencies with international practices. The new rules seek to maintain the consistency of the taxation policy when applied to digital assets and other types of assets.
This has been made in response to a call from a Swiss crypto lobby group which has urged the Swiss National Bank to include Bitcoin as some of the reserve assets.
According to the activists, introducing Bitcoin into the stock will help Switzerland become less dependent on the European Central Bank.
