In a move aimed at strengthening regulatory oversight and reducing financial risks, the Swiss Financial Market Supervisory Authority (FINMA) has proposed new guidelines for stablecoin projects. The proposal comes amid growing concerns about the potential impact on institutions regulating stablecoin projects and the broader financial ecosystem.
According to a recent guidance document, FINMA aims to classify stablecoin issuers as financial intermediaries and highlight the increasing risks associated with money laundering and sanctions evasion linked to these crypto assets.
Legal Process for Stablecoins Continues
Stablecoin projects, which are crypto assets tied to traditional currencies or other assets to maintain a stable value, have seen increasing adoption. However, their rapid growth has also led to regulatory concerns globally due to potential misuse for illegal activities.
In its guidelines published on July 26, FINMA emphasized that stablecoin issuers should be subject to the same Anti-Money Laundering (AML) obligations as traditional financial institutions. This includes verifying the identity of stablecoin holders and identifying the beneficial owners:
“Therefore, the stablecoin issuer is considered a financial intermediary for Anti-Money Laundering legislation and, among other things, must verify the identity of the stablecoin holder as a customer and identify the beneficial owner in accordance with applicable obligations (AMLA Article 3) (AMLA Article 4).”
Details on the Subject
FINMA, in addition to AML compliance, explained how stablecoin issuers could operate without a banking license if they meet certain conditions. These conditions ensure the protection of depositors, and issuers must obtain collateral from a bank in case of default.
According to FINMA, the framework sets minimum requirements for default guarantees, requiring issuers to inform their customers, stay within collateral limits, and allow immediate claims in case of bankruptcy without waiting for a loss certificate.
While FINMA’s measures enhance the protection of depositors, they do not align with the security of a banking license. Nevertheless, the regulator is determined to reduce default guarantee risks and ensure that stablecoin issuers meet robust standards to protect their customers.
The stablecoin sector, which includes cryptocurrencies pegged to traditional currencies like Tether and USDC, has recently experienced exponential growth, reaching an unprecedented market value in 2023. In response, global regulators are rushing to create guidelines for this rapidly evolving sector. According to the PwC Global Crypto Regulation Report 2023, at least 25 countries, including Switzerland, have implemented stablecoin regulations or legislation by the end of the year.
