FINMA’S ICOs GUIDELINES: A PLATFORM FOR REAL INNOVATORS TO GROW
On 16 February, 2018 the Swiss Financial Market Supervisory Authority, the FINMA, announced the issuing of a new set of guidelines intended to regulate the functioning of Initial Coin Offerings. The Swiss financial watchdog initiative is intended to address the proliferation of questionable ICOs with a structured regulatory framework, within which the startup companies running well thought out and solid Initial Coin Offerings could operate.
In the words of FINMA’s CEO Mark Branson: “The application of blockchain technology has innovative potential within and far beyond the financial markets. However, blockchain-based projects conducted analogously to regulated activities cannot simply circumvent the tried and tested regulatory framework. Our balanced approach to handling ICO projects and enquiries allows 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.”
This is at the same time a direct call to “legitimate innovators,” and a calling out of those operators who are not legitimately using Initial Coin Offering but, on the opposite, only speculating on the booming of the ICOs market, at the expenses of the investors and the token buyers.
At Elpis we consider ourselves among those “legitimate innovators” whose work can benefit from a more regulated market. We already approached the regulative issues by introducing AML and KYC practices into our Initial Coin Offering, as transparency is part of our DNA and at the very core of our business model.
We were convinced from the very beginning of our project that anti-money laundering and know-your-customer procedures can, and should, be applied by the operators themselves: there is no need to wait for any enforcement by the authorities to apply these best practices. Elpis set in place KYC and AML procedures, clearly stating the project’s goals, its framework and the milestones, the team that is working on it, to give potential bakers all the information they need to decide wether backing our project or not.
Thus, early in the process of creating the most transparent and secure ICO’s model possible, Elpis has decided to include the best practices of control and regulation into the ICO: this is the reason why we have found FINMA’s initiative regarding ICOs to perfectly suit our vision for the financial markets of the future.
FINMA’s presentation of the new guidelines starts by clarifying that the Swiss financial market laws and regulations are not necessarily applicable to all ICOs, because some of them may not even be subject to regulatory requirements. As such, ICOs are going to be analysed by the Swiss authority on a case-by-case basis.
Following the newly-created guidelines, FINMA will assess ICOs on the basis of the economic function and purpose of the tokens proposed in each offering in determining which provisions of the law will apply. The Swiss authority has categorised tokens into three broad groups: payment tokens, utility tokens and asset tokens.
The first category, the payments tokens, consists of cryptocurrencies, with “no further functions or links to other development projects.” The second group consists of utility tokens, that are generally “intended to provide digital access to an application or service” and, as such, do not qualify as securities. The third group, defined as asset tokens, will be subjected to strict securities law requirements as they will be treated like equities or bonds in the case they pay dividends or interest, or give rights to earnings streams.
Even if FINMA points out that “At present, there is no generally recognised terminology for the classification of tokens either in Switzerland or internationally,” the framework it provides will be beneficial for both startup companies and the future token holders as it promotes transparency and reinforces the distinction between professionally conducted ICOs, with solid fundamentals and a real interest in building an efficient business model, and those ICOs that are purely speculative attempts, when not outrightly scams.
FINMA’s guidelines represent an opening to real innovators, a platform for those startups that are driving the transformation of the financial and investing markets. In the wake of the multiple alarms raised by regulatory authorities all over the world, the latest coming from the Bank of England Governor Mark Carney, who recently talked of the necessity of a regulatory crackdown necessary to stop the “anarchy” in the crypto markets, FINMA’s intervention feels like a breath of fresh air for the FinTech sector.
Transparent practices and a sustainable, well-regulated market are conditions welcomed by innovators like us at Elpis as an opportunity to grow and succeed: FINMA’s ICOs guidelines represent to us a step forward in the direction we already set out to pursue for ourselves and our backers, present and future. Transparency is not just an option for us, but an obligation if we want to contribute in creating the conditions for real innovation in the investing landscape.
We have embraced the process of self-regulation from the very beginning, applying AML and KYC practices. And now we are more then happy to comply with the law of the Swiss Confederation in conducting our ICO. We are convinced that the framework the FINMA is creating, represents the right platform to reduce uncertainty and attract serious investors interested in sustain professionally conducted ICOs and well-thought out projects. Projects like the one that Elpis is offering the market the chance to evaluate and sustain in its development through a transparently conducted ICO.
If you want to join the investing revolution, check our Crypto-ICO at www.elpisinvestments.com, to know more about Elpis ICO.
Giuseppe Solinas
Chief Editor of Elpis Investments, The first AI Crypto-Assets Investment Fund: www.elpisinvestments.com, info@elpisinvestments.com
