ICO settlement in Switzerland

We continue the series of articles on the regulation of ICO in different countries. Today we have a look at Switzerland.

The Swiss Financial Market Supervisory Authority (FINMA) is in charge of ICO regulation in the country. In 2017, Switzerland was one of the most attractive countries for the ICO. However, in 2018, the country decided make steps towards regulation. On February 16, 2018 The Swiss Financial Market Supervisory Authority (FINMA) has published a survey and legal recommendations for the organizers of the ICO.

The service draws attention to the fact that the law and regulation of the financial market can not be applied to all ICOs without exception. The need for compliance with regulatory requirements is assessed in each case individually.

FINMA provided a classic classification of tokens into three types:

1) Payment tokens are synonyms for cryptocurrency. They do not have any additional functions and can only be accepted as a means of payment

2) Utility tokens are tokens that are designed to provide digital access to an application or service

3) Asset tokens means the possibility of participating in the company, gaining revenue or the right to receive dividends or interest. As for their economic function, tokens of this type are similar to shares, bonds or derivatives.

Payment tokens require compliance with AML (anti-money laundering) legislation, but do not fall under the definition of securities.

Utility tokens are not regulated, but under certain conditions can be recognized as securities.

Asset tokens are always securities, which entails corresponding obligations, for example, compliance with the requirements for prospectuses.

ICO can also combine several of the above categories. For example, AML regulation will apply to Utility tokens, which, in addition to technical functions, can be used as a means of payment.

Also, due to the specific characteristics of certain ICOs, various requirements of applicable law may apply. According to the official statement of the regulator, this concerns compliance with the law in the following areas:

• Regulations on combating money laundering and the financing of terrorism
• Regulations of the legislation on banks and banking.
• Regulations on securities trading..

Summarizing, it should be said that Switzerland remains an attractive country for ICO, but start-ups and investors need to closely monitor the development of ICO regulation in the country.